The rate of price growth in the country is higher than the central bank is prepared to tolerate, the regulator says
Inflation in Switzerland unexpectedly accelerated in February largely due to soaring airfares, rent and energy costs, figures from the Federal Statistical Office showed on Monday.
Consumer prices surged 3.4% last month year-on-year and were higher than the median estimate by Bloomberg, which predicted a slower rate of 3.1%. The February jump reflected rising prices for air transport, package holidays, rents and gasoline, indicating that the country’s central bank will have to tighten its monetary policy, the media outlet said.
Core inflation in Switzerland excluding energy and food prices also accelerated for a third successive month and reached 2.4%, the data shows.
While Switzerland has managed to maintain the lowest pace of inflation among major European economies, persistent price growth will likely force the central bank to hike rates as underlying inflationary dynamics are “stronger than what the SNB is prepared to tolerate,” Swiss National Bank President Thomas Jordan said.
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Swiss inflation saw a 3.3% rise year-on-year in January, driven by surging gas and electricity prices. The rate also exceeded economists’ forecasts of 2.9% and was the highest since August 2022. Housing and energy prices surged 5.1%, while public transport costs climbed 4.7% year-on-year. Gas prices alone rocketed by 40.3% in January in annual terms, while electricity soared by 25.5%.
The central bank has also expressed concern that companies are now more likely to pass on higher prices to customers. Utility providers adjusted prices at the beginning of the year, passing on increased costs to Swiss households. Swiss state regulator ELCOM previously predicted that electricity would become an average of 27% more expensive for consumers.
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March 07, 2023 at 12:38PM