Swiss inflation unexpectedly accelerated last month, suggesting the central bank will need to continue hiking borrowing costs.
(Bloomberg) — Swiss inflation unexpectedly accelerated last month, suggesting the central bank will need to continue hiking borrowing costs.
Consumer prices increased 3.4% in February from a year earlier, the Federal Statistics Office said on Monday. That contrasts with the median estimate in a Bloomberg survey, which predicted a slowdown to 3.1%. The jump was primarily due to rising prices for air transport, package holidays, rents and gasoline.
Core inflation, which strips out elements like energy and food, accelerated for a third month, hitting 2.4%.
While Switzerland has the lowest inflation rates of any advanced economy, last month’s acceleration means the Swiss National Bank, which already hiked rates by 175 basis points since June, is likely to continue tightening when officials meet March 23. Economists surveyed by Bloomberg predict another 50 basis-point increase.
SNB President Thomas Jordan has highlighted that underlying inflationary dynamics are “stronger than what the SNB is prepared to tolerate.”
The central bank has also expressed concerns that companies are now more likely than before to pass on higher prices to customers. Additionally, the Swiss labor market is showing no sign of weakness, and the lack of workers risks fanning wages.
EXPLAINER: How Switzerland Dodged the Worst of the Global Inflation Shock
Based on the European Union’s harmonized gauge, Switzerland’s consumer-price growth stood at 3.2%, less than half the pace in the surrounding euro area.
–With assistance from Joel Rinneby and Kristian Siedenburg.
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