The combined producer and import price index rose 0.2 percent on the month in April, matching its March gain but beating the market consensus. Even so negative base effects still saw the annual inflation rate slide from 2.1 percent to 1.0 percent, its lowest mark since March 2021.

Domestic producer prices were up 0.3 percent versus March, reducing their yearly rate from 2.7 percent to 1.9 percent. Import prices edged 0.1 percent firmer, cutting their annual change from 1.0 percent to minus 0.9 percent, the first negative print since February 2021.

Within the monthly change in the PPI, capital goods were up 1.1 percent, consumer durables 0.5 percent and intermediates 0.1 percent. However, consumer non-durables were only flat while energy fell 1.6 percent. A similar pattern was seen in import prices. As a result, the underlying composite index rose a solid 0.5 percent on the month although this was still small enough to trim the annual core inflation rate from 2.5 percent to 2.3 percent, its first fall since last November.

Accordingly, while pipeline inflation pressures in Swiss industry remain relatively subdued, they are still firm enough to trouble the SNB which seems on course to raise interest rates again next month. More generally, today's report puts the Swiss ECDI at minus 32 and the ECDI-P at minus 30. Both values show that overall economic activity continues to underperform market expectations.

Prices are seen dipping 0.1 percent on the month after a 0.2 percent increase in March.

The producer price and import price index focuses on the actual prices of products on the market (transaction price) at the time of the order. The prices of domestic products are taken at the producer or factory level, excluding value added tax and consumption taxes. For imports, prices are collected at the Swiss border, without the value added tax, taxes on consumption and tariffs. Changes in the index provide a guide to inflation from the point of view of the product's producer/manufacturer

The producer price and import price index measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the consumer price index (CPI). By tracking price pressures in the pipeline, investors can anticipate inflationary consequences in coming months. Producer and import prices are more volatile than consumer prices. While the CPI is the price index with the most impact in setting interest rates, the producer price and import price index provides significant information earlier in the production process. The producer price and import price index is considered a precursor of both consumer price inflation and profits. If the prices paid to manufacturers increase, businesses are faced with either charging higher prices or they taking a cut in profits. The ability to pass along price increases depends on the strength and competitiveness of the marketplace. The bond market rallies when the producer price and import price index decreases or posts only small increases, but bond prices fall when the index posts larger-than-expected gains. The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.