Prices for imported goods, no doubt helped by a strong Swiss Franc, pushed the producer and import price index to a 0.1 percent monthly decline in June and 0.7 percent lower than a year ago.

At the producer level, prices were unchanged from the previous month while increasing 0.3 percent from a year ago. Petroleum products were 3.2 percent lower than in May while falling 18.2 percent from June of last year. With the Swiss franc up over 13 percent versus the dollar since the start of the year, imported inflation is being kept in check.

Producers paid more for processed tea and coffee in June and for cocoa and chocolate than in May. The former rose 2.4 percent on the month and 9.3 percent on the year while the latter was up 1.7 percent on the month and 25.3 percent year on year. Some form of these prices is likely to be passed onto consumers in coming months.

At present, broad price pressures are not evident in Switzerland and so long as the Franc remains strong, that will act as an offset to imported inflation.

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.