Prices were much stronger than expected at the start of the year. A 0.6 percent monthly increase was 0.2 percentage points above the market consensus and large enough to lift the annual inflation rate from 2.8 percent to 3.3 percent. This is its first increase in five months and equalled its highest reading since last August.

Moreover, the acceleration is wholly attributable to domestic prices which jumped fully 1.0 percent on the month, raising their yearly rate from 1.9 percent to 2.6 percent. The increase here more than offset the impact of weaker import prices which dropped 0.6 percent, reducing their annual rate from 5.8 percent to 5.2 percent.

Within the CPI basket, the sharpest upward effect on the overall monthly change came from housing and energy where a 1.8 percent gain added nearly 0.5 percentage points. Restaurants and hotels (2.1 percent), food and soft drink (1.4 percent) and alcohol and tobacco (1.0 percent) also saw sizeable rises. The main downward pressure came from a seasonal fall in clothing and footwear (6.4 percent) and cheaper transport (minus 0.6 percent) on the back of lower petroleum prices (minus 1.6 percent). As a result, core prices (excluding unprocessed food and energy) were flat at December's level but up 2.2 percent on the year after a 2.0 percent increase last time.

Today's update will not sit well with the SNB and increases the likelihood of another hike in the policy rate next month. However, it also puts the Swiss ECDI at 2 and the ECDI-P at minus 8 meaning that economic activity in general is moving broadly in line with market expectations.

A 2.9 percent annual rate is expected for January consumer prices which would be a tick above December's rate.

The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by Swiss households. Monthly and annual changes in the CPI provide widely used measures of inflation. The policy target measure for the Swiss National Bank (SNB), the annual CPI rate can be distorted by swings in prices amongst the more volatile subsectors and the CPI excluding fresh food and energy is used as a better guide to underlying short-term trends. Although not a member of the Eurozone, a harmonized index of consumer prices (HICP), measured according to Eurostat's procedures, is also published alongside the CPI.

The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets- and your investments. Inflation (along with various risks) basically explains how interest rates are set on everything from loans to notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion. By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.