Swiss CPI 0.7% in August

Swiss headline inflation was up 0.7% yoy in August, a bit below expectations. Core CPI remained stable at 0.8% yoy. Inflationary pressures remain restrained in Switzerland.

This jump in inflation was caused by sharp rise in heating oil and some food prices. In August, the sharp drop had also been due to oil products prices. Core inflation edged up to 0.8% yoy after 0.7%.

Swiss inflation remains very moderate. However, it is expected that it will increase in the next few months due to very strong activity in late 06 and the first part of 07 (GDP growth has been very high and above any measure of trend growth) and the sharp decline in the unemployment rate (now well below the long term average of 3%).

However, it is expected the SNB to leave rates on hold over the next few months, until it gets a better idea of what will be the impact of the market turmoil on activity and inflation.

Goldman Sachs,
10/2/2007 12:26:23 PM