(Corrects paragraphs 1 and 3 to show that while annual
inflation has risen in some months in last few years, full-year
figures have not risen)
ZURICH, March 8 Swiss consumer prices rose at
the fastest monthly rate in nearly five years in February and
look set to rise for the full year this year for the first time
since 2010, giving the central bank a headache as it strives to
keep the Swiss franc weak.
Prices rose 0.5 percent in February from January and were up
0.6 percent year on year, the Swiss Federal Statistics Office
said on Wednesday.
Prices have registered annual growth in only a handful of
months over the last few years, but analysts expect the long run
of full-year deflation or price stagnation to come to an end
this year as higher oil prices leave their mark and the impact
of the strong Swiss franc fades.
"We think this is the turning point for inflation in
Switzerland," said Sibille Duss, an economist at UBS who is
forecasting a 0.4 percent rise in prices in 2017 and a 0.9
percent increase in 2018.
The return to inflation won't help the Swiss National Bank
weaken the currency, however, even though it officially targets
an inflation rate of below 2 percent.
"Higher inflation makes it harder for the SNB to justify its
foreign exchange interventions and very loose monetary policy
it's using to limit the rise of the franc," said Maxime
Botteron, an economist at Credit Suisse.
The bank may have to step up its interventions to prevent
the franc rising against the euro, he said.
The central bank has already been intervening more this year
as the safe-haven franc becomes increasingly attractive to
"On one hand it would seem an inflation rate of 0.5 percent
is closer to their price stability goal than negative pricing,
but with higher inflation the SNB loses part of their
justification for acting," said Botteron.
The price rises, driven by rising costs for air travel,
package holidays and vegetables, was the highest month-on- month
rise since March 2012.
Botteron said with much of February's increase driven by
volatile categories like food, prices may sometimes slip on a
monthly basis. But he a 0.5 percent rise for 2017 as a whole.
The SNB, which is due to unveil its latest inflation
forecast on March 16, declined to comment. In December it said
it expected inflation to pick up at the start of 2017.
(Reporting by John Revill and Angelika Gruber; Editing by Hugh