Swiss Inflation Accelerated in March as Oil Soared

Swiss inflation accelerated more than expected in March to the fastest pace in more than 14 years as prices for energy and food climbed to records.

The inflation rate rose to 2.6 percent from 2.4 percent in February, the Federal Statistics Office in Neuchatel said today. That’s the highest level since October 1993. Economists expected a rate of 2.5 percent, the median of 14 estimates in a Bloomberg survey shows. From the previous month, prices rose 0.3 percent.
Swiss consumer prices rose after oil reached $111.80 a barrel March 17 and the cost of commodities such as wheat and corn shot to new highs. Three weeks ago, the central bank raised the inflation forecast for this year to 2 percent, saying price increases “run the risk of spinning out of control” if the cost of oil keeps climbing.

“This is all oil, and the Swiss National Bank can’t directly impact oil prices,” said Reto Huenerwadel, senior economist at UBS AG in Zurich. “There’s no immediate worry, other than needing to keep inflation expectations under control because that could result in higher wage demands.”

The cost of oil products rose 25 percent from a year earlier and 4.7 percent from the month before, today’s release said. Food and beverages were up 2.8 percent on the year, and transportation costs rose 4.9 percent.

Even as an expansion slows in the U.S. and Europe, consumer demand in Switzerland is not letting up. Economic growth reached the fastest pace in more than two years in the fourth quarter, giving momentum to the start of this year. The SNB said in December that a slowing economy would bring inflation below 2 percent this year.

Bloomberg