Switzerland: Consumer Prices flat in December

Switzerland's consumer prices remained flat in December, the Federal Statistical Office reported Thursday. It declined 0.1% in December, which was in line with market expectations and followed the 0.2% decline in prices seen in November.

Month-on-month, consumer prices dropped 0.1% versus a 0.2% decrease in November. This was the second consecutive decline and came in line with expectations.

For 2016 as a whole, there was a decline in prices of 0.4% following a 1.1% decline the previous month. There was a decline in domestic prices of 0.1%, while import prices declined 1.4%.

For December, prices for domestic goods were unchanged, while import prices declined 0.3%. There was an increase in monthly prices for fuel oil, public transport and air transport. In contrast, there was a decline in food prices with clothing and package travel abroad also registering monthly declines.

The Swiss National Bank (SNB) remains committed to price stability and there was a downgrading of the 2017 inflation forecast to 0.1% at 0.2% at the December monetary policy review. The SNB will, therefore, remain very sensitive to inflation trends with fourth-quarter price increases lower than expected.

There has, however, been an increase in energy prices over the past few weeks and the Swiss currency is slightly weaker against the dollar. Base effects should also push the annual inflation rate into positive territory next month.