Lower oil prices pushed down combined Swiss producer and import prices in January, raising the possibility of an interest rate cut to keep consumers spending and stave off the threat of deflation. Swiss producer and import prices fell 0.9 percent in January from a year earlier and were 0.8 percent lower compared with the previous month, the Federal Statistics Office said on Friday.
Producer prices rose 1 percent year-on-year but inched lower on the previous month, while import prices fell 4.7 percent on an annual basis. "The producer price index was down more than expected, heavily impacted by lower oil and metal prices," said Credit Suisse economist Fabian Heller.
Analysts said deflation in consumer prices was possible in the next few months, but this trend would probably reverse later, with consumers continuing to spend rather than waiting for lower prices before dipping into their pockets.
"Recent price developments are nonetheless likely to represent a significant concern to the SNB (Swiss National Bank), and as signalled by recent SNB commentary, a further rate cut in March to 0.25 percent cannot be ruled out," said 4Cast Limited analyst Saara Tuuli.