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CH: Producer and Import Price Index
| Actual | Previous | |
| Month over Month | -0.1% | -0.3% |
| Year over Year | -2.1% | -2.1% |
Highlights
Combined producer and import prices fell 0.1 percent in July and 2.1 percent from the same period last year. While producer prices were unchanged from June, import prices fell 0.6 percent from the previous month. On a year-on-year comparison, they fell 2.3 percent and 1.5 percent, respectively.
On the import side, energy prices were down 10.9 percent in July, but up 11.1 percent year-on-year. For producers, energy costs fell 0.1 percent month-on-month and 3.0 percent year-on-year.
Core inflation for combined prices was up 0.1 percent from June and down 2.3 percent from a year ago.
There were some notable price increases, with those of watch manufacturers rising 0.9 percent on the month and 1.5 percent on the year, while import prices for computers and peripherals rose 2.8 percent month-on-month and 3.3 percent year-on year. For the latter category, the increases are not limited to Switzerland. Other European countries have been reporting higher prices for computer equipment, likely due to competition for semi-conductors.
Presently there is no overall pipeline inflation to be seen, although energy prices are likely to continue to be volatile as the Middle East conflict drags on. For now, inflation is not likely to be on the list of headaches for the Swiss National Bank.
Definition
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
Description
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.