Consumer prices were slightly softer than expected in June. A 0.1 percent monthly increase was small enough to reduce the annual inflation rate from 2.2 percent to 1.7 percent, a tick below the market consensus and its lowest level since January 2022.

Domestic prices were a little firmer, climbing 0.2 percent on the month but still easing their yearly rate from 2.4 percent to 2.3 percent. Import prices were much weaker, falling 0.3 percent on the month, which was enough to pull down their annual rate from 1.4 percent into negative territory at minus 0.1 percent.

Within the CPI basket major groups, clothing and footwear (minus 1.7 percent) led the monthly declines, followed by transport (minus 0.4 percent) and alcohol and tobacco (minus 0.3 percent). Prices of petroleum products extended their decline, dropping 0.7 percent in June. As a result, core prices (excluding unprocessed food and energy) remained flat on the month while annual core inflation slipped from 1.9 percent to 1.8 percent. The steepest monthly gains were in food and soft drink (0.9 percent), restaurants and hotels (0.6 percent) and recreation and culture (0.4 percent).

Today's update puts the Swiss ECDI at minus 30 and ECDI-P at minus 34. Both values show overall economic activity continuing to lag market expectations, as it has consistently since mid-March.

A 1.8 percent annual rate is expected for June consumer prices which would compare with May's 2.2 percent 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.