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Swiss price pressure still weak in Jan, supports case for cap
February 12, 2013 / 8:41 AM / in 5 years

Swiss price pressure still weak in Jan, supports case for cap

* Prices fall 0.3 pct m/m, 0.3 pct y/y

* SNB capped franc to fend off deflation and recession

* Higher oil and rent prices could push CPI higher-economist

ZURICH, Feb 12 (Reuters) - Swiss consumer prices fell at a slightly faster pace in January, supporting the case for the Swiss National Bank to maintain the cap on the franc it introduced to stem the risk of deflation.

Prices fell 0.3 percent month-on-month compared to a 0.2 percent fall in December, in line with average analyst forecasts. Prices also fell 0.3 percent on the year, compared to a 0.4 percent drop recorded in December.

The Swiss National Bank capped the franc at 1.20 per euro in September 2011 to prevent Switzerland slipping into a cycle of falling prices and recession after investors seeking a safe haven from the euro zone crisis pushed the Swiss currency up by a fifth in just a couple of months.

SNB board member Fritz Zurbruegg said in a newspaper interview published on Monday that the central bank saw no danger of inflation for the foreseeable future.

The SNB lowered its near-term outlook for inflation at its quarterly policy review in December, predicting prices would fall 0.1 percent in 2013 and rise just 0.4 percent in 2014, far below the SNB’s 2 percent threshold for price stability.

In January, sales pushed prices for clothing and shoes down 10 percent while prices for hotels and restaurant meals as well as food and non-alcoholic drinks rose.

UBS economist Reto Huenerwadel said in a note higher prices for oil and its derivatives and higher rent prices were the only goods categories that could push consumer prices sustainably higher in coming months. (Reporting by Caroline Copley and Silke Koltrowitz; editing by Patrick Graham)

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