Consumer prices were significantly weaker than expected in November. A 0.2 percent monthly drop easily undercut the market consensus and reduced the annual inflation rate 1.7 percent to just 1.4 percent. This was its weakest print since October 2021 and well short of the SNB's definition of price stability.

Domestic prices were again flat on the month, trimming their yearly rate by a tick to 2.1 percent. Import prices dropped 1.1 percent, reducing their annual rate from 0.4 percent to minus 0.6 percent.

Within the CPI, the main downward pressure on the monthly change came from transport where a 1.1 percent monthly fall alone subtracted more than 0.1 percentage point. Elsewhere, restaurants and hotels (minus 1.0 percent), recreation and culture (minus 0.9 percent), food and soft drink (minus 0.6 percent) and alcohol and tobacco (minus 0.8 percent) all also weighed. The only increase of note was in housing and energy (0.7 percent). As a result, core prices (excluding unprocessed food and energy) were flat at September's level, reducing the annual underlying rate from 1.5 percent to also 1.4 percent.

The November data should rule out any risk of SNB tightening this month. Headline and core inflation have been below 2 percent every month since May and the latest declines would seem to confirm a return to much more normal rates. Even so, at 14 and 35 respectively, the Swiss RPI and RPI-P show economic activity in general running ahead of market expectations.

Prices are seen unchanged on the month, leaving the annual inflation rate steady at 1.7 percent.

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.