Consumer prices were a little firmer than expected at the start of the quarter. A 0.3 percent monthly increase was a tick above the market consensus and large enough to lift the annual inflation rate from 1.0 percent to 1.4 percent. This was the latter's first increase since last December and also a 4-month high. That said, the latest reading remains within the SNB's definition of price stability.

The headline acceleration reflected rises in both domestic and imported inflation. For the former, a 0.1 percent increase in prices raised the yearly rate from 1.8 percent to 2.0 percent while a sizeable 1.1 percent jump in import charges saw their rate climb from minus 1.3 percent to minus 0.4 percent.

Within the CPI basket a 2.4 percent monthly spurt in petroleum prices added nearly 0.1 percentage point to the overall change but there were strong gains too in household goods and services (2.2 percent) and recreation and culture (1.4 percent). The only falls were in restaurants and hotels (0.7 percent) and communication (0.1 percent). As a result, core prices (ex-food and energy) advanced 0.4 percent versus March, boosting the underlying yearly inflation rate from 1.0 percent to 1.2 percent, a 3-month peak.

The April data do not rule out another cut in the SNB policy rate in June but they will leave the ever-watchful central bank all the more cautious. More generally, they put the Swiss RPI at minus 13 and the RPI-P at minus 16. Overall economic activity continues to modestly lag behind market expectations.

Prices are seen up 0.2 percent on the month, lifting annual inflation from 1.0 percent to 1.2 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.