Switzerland’s CPI Misses Expectations, Franc Recovers

According to data released by the Swiss Federal Statistical Office, the Consumer Price Index stood at 0% in September (month-on-month), below expectations of 0.2% and August’s 0.2%. In yearly terms, the CPI increased by 0.9%, also lower than expectations of 1.1%, but in line with August’s 0.9%.

The Federal Statistical Office also reported that real retail sales increased by 0.5% in August (year-on-year), lower than expectations of 0.6%, in contrast with July’s 2.3% contraction.  In nominal terms, retail sales rose by 0.2% in yearly terms. Excluding service stations, retail sales fell by 0.4% in yearly terms. Food, tobacco, and drink sales contracted by 2.9% in nominal terms (year-on-year), while retail sales excluding food and beverages rose by 2.1% in yearly terms. 

In its most recent meeting, the Swiss National Bank decided to leave its ultra-loose monetary policy unchanged, and it is expected to sustain this policy given the bank’s inflation expectations for this year, which currently stand at 0.5%. This position contrasts with that of other central banks, which are considering tightening their monetary policy stances.

The bank also recently decided to resume its interventions in the foreign exchange market, increasing its reserves by 8.9 billion francs in the second quarter and leaving the current account surplus at 10.5 billion francs.

The Swiss economy has been recovering and getting close to pre-pandemic levels as restrictions on social and economic life have been eased progressively. Despite this, the government recently revised down its prediction for this year’s GDP, now expected to rise by 3.2%.  Analysts at ING Group expect the economy to grow around 3% next year.

Despite this, Switzerland still struggles with the spread of the COVID-19 virus, much like the rest of the world. Since the beginning of the pandemic, about 841,571 COVID-19 cases have been reported, as well as 11,105 related deaths. To counter the spread of the virus, the government is advancing an ambitious vaccination campaign. So far, 10.4 million doses of the vaccine have been distributed among the local population, with 5.03 million individuals now fully vaccinated, accounting for 58.2% of the total population.

The government recently decided to restrict entry to unvaccinated non-citizens coming from Albania, Armenia, Azerbaijan, Brunei, Japan and Serbia.

Since the beginning of the week, the Swiss franc has gained 0.32% against the US dollar, recovering from the previous week’s 0.66% drop. During yesterday’s session, the franc gained 0.16% against the greenback, gaining ground for the third consecutive day and closing the session at the 1.0756 level.

By 10:58 GMT, the Swiss franc gained 0.33% against the US dollar, hitting the 1.0774 level.