Swiss Consumer Prices Unexpectedly Unchanged in July

Swiss consumer prices unexpectedly remained unchanged in July, ending 21 months of declines.

Prices held steady from a year earlier after dropping 0.1 percent in June, the Federal Statistics Office in Neuchatel said in an e-mailed statement today. Economists expected an annual decline of 0.1 percent, according to the median of 15 estimates in a Bloomberg News survey. Prices declined 0.4 percent from June.

The Swiss National Bank imposed a franc ceiling of 1.20 versus the euro in September 2011 to fight deflation threats. Even so, consumer prices continued to drop and before last month were in their longest stretch since at least 1971, according to data compiled by Bloomberg.

“The significant increase in energy prices due to the rise in oil prices” was responsible for the annual increase, said Alexander Koch, an economist at UniCredit SpA in Munich. “The base effect in the energy component will be reversed in the coming months, and for the rest of the year we expect more mild deflation.”

Koch expects consumer prices to fall 0.3 percent this year, in line with the SNB’s prediction, before climbing 0.6 percent in 2014.

Weak Inflationary Pressure

“Inflationary pressure obviously remains weak,” Colin Bermingham, an economist at BNP Paribas SA in London, said in a note to customers. Much of the previous weakness “is attributed to falling goods prices, which are impacted by exchange rate movements,” he said.

The cost of imported consumer goods fell 1.2 percent from a year earlier and decreased 1.4 percent from June, today’s report showed. Prices of domestic goods climbed 0.4 percent on the year and were unchanged on the month.

Under a European Union harmonized method, Swiss consumer prices rose 0.5 percent from a year earlier and were unchanged on a monthly basis.