| Actual | Previous | |
| Month over Month | 0.6% | -0.1% |
| Year over Year | 0.1% | 0.1% |
Highlights
Consumer prices rose 0.6 percent in February, the highest since February of last year. Compared to a year-ago, inflation was 0.1 percent higher. Core prices excluding fresh and seasonal products, energy, and fuel rose a more modest 0.2 percent in February, but were up 0.4 percent year-on-year.
Consumers faced higher rental costs, which rose 0.4 percent month-on-month and 1.2 percent from February of last year. Leisure activities including air travel, lodging, and package tours were also higher. Air transport costs rose 15.2 percent in February, while hotel stays cost 17.0 percent more than a month ago.
Overall prices for goods were 0.2 percent higher during the reporting month but 1.4 percent below their year-ago levels. Within the sector, semi-durable goods rose 1.2 percent on the month, while those for durables were up 0.1 percent. Services prices rose at a faster pace gaining 0.9 percent over the previous month.
Swiss inflation has been subdued for the better part of to years, and today's monthly increase was largely due to discretionary purchases. With the conflict in the middle east spreading, there are likely to be some price shocks from energy in the coming months. Some of that will be mitigated due to the strength of the Swiss franc as oil prices are denominated in dollars.
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.