Swiss CPI Hits 1.5% in October, Topping Forecasts as Core Prices Hold Steady

• Switzerland's October CPI registered a year-on-year rise of 1.5%, above the 1.3% forecast.
• The previous month had shown an annual gain of 1.0%.
• Core CPI in Switzerland posted a 0.5% year-on-year increase in October.
• This matched the prior month's core reading.

The headline annual inflation rate in Switzerland picked up at the start of the third quarter, advancing to 1.5% from 1.0% beforehand. Similar to other economies in the region, elevated energy prices remain the principal force behind consumer price increases. Hence, a cursory look at the data could suggest that inflation is warming up once more.

Core annual inflation, on the other hand, held firm at just 0.5%. This indicates that the broader price picture is less worrying than the top-line number may imply.

For the SNB, that is the key takeaway. The monetary authority has argued over recent months that the uptick in inflation stems mostly from higher energy expenses, with scant signs of knock-on effects in the rest of the economy.

The figures released today do not seriously undermine that story.

Naturally, headline inflation edging towards the 2% threshold implies that policy makers will feel some discomfort if energy costs stay high. That concern would intensify if additional evidence appears of businesses transferring those higher expenses to consumers.

For now, though, the SNB can afford to wait on the sidelines and evaluate how enduring these price pressures are. In short, there is no need for panic at this stage.