ZURICH, April 3(Reuters) – Swiss inflation edged below forecasts in March as fuel costs fell sharply, data showed on Monday, but it remains well above the central bank’s target level and interest rates still appear likely to rise further.
Consumer prices rose last month by 2.9% year-on-year, down from 3.4% in February, marking the 13th-straight month that increases have exceeded the Swiss National Bank’s (SNB) 0-2% goal. Prices rose 0.2% month-on-month.
Both Credit Suisse and UBS were anticipating an annual rate of 3.1%, and J.Safra Sarasin 3.2%.
Fuel costs fell 6.3% year-on-year, reflecting the base effect of a sharp rise in March 2022, the first full month after Russia’s invasion of Ukraine.
Annual core inflation, which strips out volatile items like fuel and food, was 2.2%.
Thomas Gitzel, chief economist for VP Bank, said that while the core data – down from a reading of 2.4% in February – showed a broader easing of inflationary pressure, further SNB action to rein it in was still on the cards.
“In absolute terms, inflation remains at a relatively high level… so (SNB rate-setters) must raise the base rate again at their next policy meeting in June,” he said in a note to clients.
He forecast a 25bps hike at that meeting and a further 25bps rise in September.
Prior to Monday’s data, many analysts were expecting at least one further hike in June.
Headline annual CPI has been above the SNB’s target range since February 2022 and, as part of ongoing efforts to rein it in, the central bank hiked interest rates for a fourth policy meeting in succession, by 50 basis point to 1.5%, last month.
