Swiss central bank monitors heat-driven food price pressures, while higher petroleum costs remain the main driver of rising inflation.
The Swiss National Bank (SNB) is monitoring the impact of unusually hot and dry weather on food prices, although Chairman Martin Schlegel said it has so far played only a limited role in the country’s broader inflation increase.
Speaking in an interview broadcast by Swiss broadcaster SRF on Saturday, Schlegel acknowledged that the unusually hot and particularly dry summer had affected some food prices.
“The unusually hot and particularly dry summer has affected food prices, and there have clearly been some changes in prices,” Schlegel said.
His comments came after Switzerland’s annual inflation rate doubled in August, reaching its highest level in almost two years, raising concerns that reduced harvests and lower water levels on major transport routes could put further pressure on food prices.
However, Schlegel said the recent rise in inflation had been driven largely by higher petroleum product prices, while measures were also in place to limit the impact of rising food costs.
“There are also measures in place to address this, and so far, the increase in inflation has been driven almost entirely by petroleum products,” he said.
The SNB kept its benchmark interest rate unchanged at 0% on Thursday, despite several other central banks raising borrowing costs in response to inflation pressures linked to higher energy prices.
Schlegel said the central bank expects the current increase in inflation to be temporary and forecasts that price growth will remain within its target range of 0% to 2% through the end of its forecast period in mid-2029.
“We expect crude oil prices to fall again, meaning the impact of the current higher oil prices should gradually diminish over time,” he said.
Schlegel also played down the recent decline in the Swiss franc, describing it as a modest reversal following years of steady appreciation.
“There have been extended periods when the franc steadily strengthened,” he said. “What we are seeing now is only a slight reversal of that trend.”
Goodness Anunobi
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