Good news for Swiss economy: prices stable
Prices have remained stable in Switzerland for the eighth year in a row, according to figures released on Friday by the Federal Statistics Office.
The average inflation rate for 2001 was one per cent, well below the two per cent limit with which the Swiss National Bank equates price stability.
Average inflation in 2000 was 1.6 per cent and 0.8 per cent in 1999. A figure of 1.1 per cent is being forecast for this year.
Domestic goods prices rose an average 1.7 per cent over the year, while import prices fell an average of 1.2 per cent in 2001.
The Office said in a statement from its headquarters in Neuchâtel that consumer prices in Switzerland stood almost at a standstill in December.
Prices slipped by just 0.04 per cent in December from November, and were just 0.3 per cent higher than in December 2000.
The figures are being seen as a sign that there are virtually no price pressures in the Swiss economy.
Commenting on the December figures, the Office said falling oil prices had contributed to the stable inflation reading by lowering import prices.
Economists had widely forecast a low inflation reading for the final month of 2001, supporting widespread expectations of another interest rate cut by the Swiss National Bank soon.
There have been a series of negative economic reports over recent weeks that have tended to underscore the expectations, indicating that the Swiss economy's slowdown is likely to continue for at least another six months.
The National Bank, which is the guardian of price stability with its monetary policy, is forecasting inflation of 0.9 per cent this year, while the cantonal bank of Zurich on Thursday reduced its 2002 inflation forecast downwards from its original 1.1 per cent to 0.7 per cent.
No inflation risks
According to Jean-Pierre Béguelin, chief economist of the Geneva private bank, Pictet & Cie, there are no inflationary risks in Switzerland. "And the situation should not change in 2002," he said.
The consumer price index is used for a wide variety of applications, ranging from appraisal of the economic situation in connection with Switzerland's monetary policy or its ability to compete at international level, through to the indexation of wages and pension benefits.
It is calculated monthly on the basis of retail prices paid in Switzerland.
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