Here are the key details about the Swiss Consumer Price Index (CPI) data on a Monthly basis:
The Swiss Consumer Price Index (CPI) is a monthly measure of the change in the prices of the basket of consumer goods and services purchased by Swiss households from month to month. It is an inflation indicator that is widely followed in Switzerland.
Some key points about the Swiss CPI (m/m):
- It is released monthly by the Swiss Federal Statistical Office, usually around the middle of the following month.
- The index measures the change in prices compared to the previous month, expressed as a percentage.
- A positive monthly reading indicates that consumer prices are higher than the previous month, while a negative reading indicates lower prices.
- The Swiss National Bank (SNB) is closely monitoring CPI data as part of its monetary policy decisions, aiming to maintain price stability with a target inflation rate of around 2% per annum.
- Large deviations in monthly CPI data from market expectations can affect the Swiss franc (CHF) exchange rate, as they provide insight into inflationary pressures and a potential response from the Swiss National Bank.
- CPI data covers a wide range of consumer goods and services, including food, housing, transport, healthcare, entertainment and more, giving a broad view of price changes in the Swiss economy.
- Swiss CPI trends can influence the SNB’s decisions on interest rates and other monetary policy tools to achieve inflation targets.
In short, the Swiss Consumer Price Index Monthly is an important monthly economic indicator that provides a timely update on the pace of inflation in Switzerland, which is closely monitored by policymakers and markets.
Analysis of USD/CHF exchange rate fluctuations
The USD/CHF exchange rate has become volatile this week after remaining steady for most of April. USD/ CHF broke through the resistance and rose above 0.92 earlier this week, and despite falling below this level yesterday after the FOMC meeting, the previous resistance zone at 0.9150 turned into support.
Last week, the Swiss central bank confirmed that it had completed its task on inflation, as noted by Swiss central bank President Thomas Jordan. Lower levels were still rising for USD/CHF, which was a bullish signal, and Jordan’s comments last week added further weakness to the CHF, sending the pair above 0.92.
Swiss CPI trends can influence the SNB’s decisions on interest rates and other monetary policy tools to achieve inflation targets.
Last night, the Fed refused to raise interest rates, which served as a relief for the markets, and therefore this pair retreated. But Fed Chairman Jerome Powell also didn’t commit to rate cuts, so we’re back to where we were with respect to the Fed, higher interest rates for longer. Today the Swiss CPI and retail sales for April have not changed much for this pair.
After talking about successfully overcoming inflation, this is a minor setback for the SNB. The headline annual inflation rate was higher than estimated, at 1.4% with core annual inflation also rising to 1.2%. However, the numbers remain well below the crucial 2% mark at the moment. This is important in justifying the SNB’s policy axis.
Analysis of changes in the Swiss CPI in May and their impact on currencies
The CPI increased by 0.3% in May 2024 compared to the previous month to reach 107.7 points (December 2020 = 100). The inflation rate was +1.4% compared to the same month of the previous year. These are the results of the Federal Statistical Office (FSO). The 0.3% increase compared to the previous month was due to several factors including higher rental prices and international holidays. Various types of fresh vegetables also recorded an increase in their prices, as well as gasoline. On the other hand, heating oil prices have fallen. and foreign red wines, as well as additional accommodation rates.
The actual report matched expectations when it comes to the annual CPI. The monthly CPI came in slightly lower than expected at 0.3% compared to the previous month. However, it should be noted that there is an almost equal split in the forecast for the monthly reading, between 0.3% and 0.4%. The Swiss franc weakened after the report, with USD/CHF erasing the daily decline.
– The price movement of the US dollar was mixed in Europe. Overall, the dollar extended losses after hitting two-month lows following Monday’s weak ISM manufacturing data for May. Traders noted that the yield curve feature would help the dollar avoid steeper losses for now.
– EUR/USD is slightly below 1.09 with a focus on the ECB’s interest rate decision on Thursday.
– Swiss CPI data kept the door open for the Swiss central bank to continue rate cuts at its June policy meeting.
– USD/JPY moved below 155.40 after Bank of Japan Governor Ueda stated that the degree of monetary support could be adjusted if core inflation continues to move in line with his expectations.
