Swiss Consumer Price Index (CPI) inflation slowed to 0.4% year-on-year in July, down from 0.5% in June, according to Nomura strategists. This figure matched consensus expectations but was below Nomura's own forecast of 0.5% for July. Core inflation remained steady at 0.3% year-on-year, in line with consensus and slightly below Nomura's 0.4% estimate. On a month-on-month basis, the CPI fell by 0.1%, which was a downside surprise compared to Nomura's expectation of no change. The main factor behind this surprise was a 0.4% month-on-month decline in transport prices, whereas Nomura had anticipated a 0.6% increase.
Domestic prices increased by 0.5% year-on-year, while imported product prices were unchanged from a year earlier. The easing of imported energy cost pressures, which had previously contributed to inflation due to the Iran war, also played a role in the subdued inflation reading. Car fuel prices were specifically cited as a contributor to the slowdown in Swiss inflation for July.
Nomura now expects Swiss inflation to average 0.5% year-on-year in Q3, which is 0.2 percentage points below the Swiss National Bank’s (SNB) forecast of 0.7% for the quarter. While Nomura anticipates some acceleration in inflation through the remainder of the quarter, they still project the average to remain below the SNB’s path. This softer inflation backdrop implies a less supportive environment for the Swiss Franc (CHF) in the near term. No specific market reactions or analyst opinions beyond Nomura's forecast adjustments were mentioned in the article.
CONCLUSION
Swiss inflation data for July came in below both the SNB's forecast and Nomura's expectations, driven by weaker transport and energy prices. Nomura now expects Q3 inflation to average 0.5% year-on-year, undercutting the SNB's 0.7% projection, which could weigh on the Swiss Franc outlook.