August 20, 2024
Swiss producer prices remained flat in July over the month and dropped by 1.7% over the year which is slower than decrease in June by 1.9%. The indicator fell below zero level in May 2023 and since then remains in negative territory. The bottom at -2.3% was reached in January 2023 and since then it has been inching up slowly (see chart). Monthly data shows the last attempt to break downtrend has been failing for the last three months (see chart).
Strong franc makes import less expensive for businesses purchasing goods and services abroad leading to price easing. Deflation in producer prices is a negative scenario for police-makers as it steadily translates into the dynamic of consumer inflation which is already below target and keeps going down. Data suggest the current rate cuts policy by SNB will be hold on in the commng month.
⭐️Summary:
Producer prices slowed easing in the last six month, however, are still negative. That is a signal for SNB to keep cutting rates.