Jun 02, 2022 03:35AM ET
By: AnalysisWatch
Prices in Switzerland rose in May to their highest level in 14 years, the government said on Thursday, making Switzerland the latest country to be hit by rising fuel and food prices affecting economies around the world.
The consumer price index rose 2.9 per cent year-on-year as transport, food and drinks became much more expensive in a country known for historically low inflation.
This is Switzerland's highest price increase since September 2008 and the fourth consecutive month in which prices have exceeded the price stability target set by the central bank.
Switzerland's national bank is targeting annual inflation at 0-2%, but prices have been outside that range since February, putting pressure on the central bank to start raising interest rates.
The central bank, which is due to present its latest monetary policy update on 16 June, declined to comment on Thursday's inflation figures.
Inflation becomes more alarming the higher the figures and the longer it takes to cross the 2 per cent threshold, said Alessandro Bee, an economist at UBS.
However, Bee expects the SNB to wait until September to start raising rates after assessing the impact of the European Central Bank's rate hike, which it expects in July.
Credit Suisse economist Maxim Botteron believes the SNB will wait until December before raising rates to -0.5% from the current -0.75%.
SNB officials recently stressed that they consider the surge in inflation to be temporary: according to previous forecasts, the SNB expects inflation to be 0.9% in 2023 and 2024.
However, Andrea Mehler, a member of the SNB board, said that the SNB would "not hesitate" to raise rates if inflation remains stubbornly high.
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