Inflation falls surprisingly sharply in November
Published: Monday, Dec 4th 2023, 11:30
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Inflation in Switzerland fell surprisingly sharply in November. Although residential rents have risen in line with the higher reference interest rate, prices for vacation travel, petrol and heating oil, for example, have fallen. According to experts, the monetary authorities can therefore sit back and relax.
Inflation fell to 1.4% in November after 1.7% in October, as reported by the Federal Statistical Office (FSO) on Monday. This is the lowest level since the end of 2021, meaning that Swiss consumer goods were 1.4% more expensive in the month under review than in the same month last year.
This means that inflation in Switzerland will fall even further into the 0 to 2% range targeted by the Swiss National Bank (SNB). Some of the experts surveyed by AWP had estimated significantly higher values in the range of 1.5 to 2.1 percent.
Compared to the previous month, the national consumer price index (CPI) fell by 0.2% to 106.2 points in November.
Effect of rents (so far) smaller than expected
According to the FSO, the index for rental prices rose by 1.1% compared to October. As a reminder: following the first increase in the reference interest rate, many Swiss households saw their rents rise in October, or at the latest in November. However, the higher rents only pushed up inflation by 0.2 percentage points in November compared to October.
"The higher rents had less of an effect than expected," noted UBS economist Alessandro Bee. However, according to the FSO, it is not yet possible to conclusively assess the impact of the reference interest rate on inflation. There are a number of other factors such as new construction activity, renovations and tenant changes.
On the other hand, two product groups were the main drivers of inflation. The first belongs to the "vacations" category: prices for hotels and package tours abroad fell significantly in November. Petrol and heating oil also became significantly cheaper.
Accordingly, imported goods cost 0.6% less than a year earlier. Inflation remains relatively high for domestic goods. These increased in price by 2.1% in the month under review. Core inflation, which excludes volatile goods such as food, energy and fuel, fell from 1.5 percent to 1.4 percent.
Price drivers ahead
Looking ahead, there will be various inflation drivers in the coming months. With the reference interest rate rising again, for example, many Swiss people will have to shoulder rising rental costs again. In addition, higher public transport and electricity tariffs - energy suppliers are only allowed to adjust these at the turn of the year - as well as higher VAT will provide a boost.
Nevertheless, experts do not expect a major jump in inflation. According to Bantleon economist Jörg Angelé, inflation will level off at around 1.5 percent. Wages in Switzerland, for example, have risen significantly less than in the eurozone. "The SNB can therefore consider its mission of anchoring the inflation rate back within the self-imposed target range to be accomplished," thinks Angelé.
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