Swiss inflation surprises higher in October but core prices offer some relief
- Switzerland October CPI +1.5% vs +1.3% y/y expected
- Prior +1.0%
- Switzerland October core CPI +0.5% y/y
- Prior +0.5%
Swiss headline annual inflation picks up at the start of the third quarter, rising to 1.5% from 1.0% previously. Much like elsewhere around the region, higher energy prices are the main culprit in continuing to feed through to consumer prices. As such, the inflation numbers may look to be heating up again at first glance.
But in looking to core annual inflation, that remains unchanged at just 0.5%. That tells us that the broader inflation picture isn't quite as alarming as the headline reading might suggest.
And for the SNB, that is the most crucial takeaway here. The central bank has been arguing for months that higher energy costs are largely responsible for the inflation pickup, with limited evidence of second-round effects spilling over to the wider economy.
The latest figures we're seeing today doesn't really challenge that narrative as such.
Naturally, headline inflation moving closer to the 2% mark does mean that policymakers won't be entirely comfortable if energy prices continue to stay elevated. That will especially be the case if there is more evidence of businesses eventually passing those higher costs on to consumers.
But at least for now, the SNB still has room to sit comfortably on the sidelines and assess how persistent these inflation pressures might become. In other words, there's no reason to panic just yet.