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Investing.com -- The Swiss Consumer Price Index (CPI) inflation rate experienced a slight decrease from 0.4% in January to 0.3% in February. Despite the dip, the rate remained marginally above the consensus and Capital Economics (CE) forecasts, both of which predicted a rate of 0.2%.
The decrease in the headline rate was driven by a notable fall in both seasonal food and energy inflation. Seasonal food inflation saw a drop from -1.3% in January to -2.6% in February, while energy inflation fell from -5.2% to -6.4%.
Core inflation, however, remained steady at 0.9%. This was due to a rise in core goods inflation counterbalancing a decrease in services inflation, particularly in the accommodation sector.
Rent inflation, a key factor in the CPI, saw a minor decrease from 3.4% to 3.2%, which was less than expected. However, analysts predict a significant fall in rent inflation this year, following the drop in the mortgage reference rate on Monday. This change is expected to allow many tenants to reduce their rents by 3%.
According to Capital Economics analysts, the stronger core goods inflation data in February lessens the possibility of the headline inflation dipping below zero later this year. Despite the low headline rate, there is evidence suggesting that deflationary pressures are easing.
The analysts further noted that the higher-than-expected inflation in February could impact the Swiss National Bank’s (SNB) decision on whether to cut its policy rate by an additional 25 basis points on 20th March.
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