| Actual | Previous | |
| Month over Month | -0.1% | 0.0% |
| Year over Year | 0.1% | 0.1% |
Highlights
Consumer prices fell 0.1 percent in January led by declines in electricity and supplemental accommodations which fell 3.0 percent and 8.4 percent respectively. Prices overall were 0.1 percent higher than a year ago.
When stripped of prices for fresh and seasonal food, energy and fuel, prices rose 0.1 percent month-on-month and 0.5 percent year-on-year. Those gains matched those of domestic prices, while imported goods were 0.6 percent lower from December and down 1.5 percent from January of last year, with the latter helped by continued Swiss franc strength.
Consumers, however, faced increased bills for insurance, with that for motor vehicles rising 7.4 percent on the month, while the cost of insuring households rose 4.8 percent month-on month. From a year ago, those prices are also up 7.4 and 4.8 percent, respectively.
While higher insurance premiums are an unwelcome development for consumers, the overall price environment is very tame. Should the economy slow, the Swiss National Bank has some policy leeway on rates, although it could be rather cautious about entering a negative interest rate regime again.
Definition
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.
Description
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.