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EUROPEAN INFLATION: Sep SZ Details Show Services Contribution Declined vs Aug

EUROPEAN INFLATION
CEEMEABulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

Looking at the individual subcategories and their respective contributions to Swiss August headline CPI shows that while the main downside contribution indeed comes from the energy and fuels category (-0.18pp contr vs Aug), services inflation declined more than it appeared from the initial, rounded figures - its contribution to headline declined by almost 0.11pp since last month. 

  • Regardless of that, we think the print does not warrant a material reassessment of short-term SNB rate expectations - further easing has been the base case before, and an outsized cut appears unlikely given the policy rate already only stands at 1.0%. However, if inflation continues to print softer, that might push terminal rate expectations to the downside over time. In that context, though, note that energy, which was the main downside contributor here vs August, can be a low-persistence inflation category.
  • The print did push CHF lower, with EURCHF standing at levels around 0.9417 at the time of writing - around 40 pips higher than pre-release.
  • For details see table:
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Looking at the individual subcategories and their respective contributions to Swiss August headline CPI shows that while the main downside contribution indeed comes from the energy and fuels category (-0.18pp contr vs Aug), services inflation declined more than it appeared from the initial, rounded figures - its contribution to headline declined by almost 0.11pp since last month. 

  • Regardless of that, we think the print does not warrant a material reassessment of short-term SNB rate expectations - further easing has been the base case before, and an outsized cut appears unlikely given the policy rate already only stands at 1.0%. However, if inflation continues to print softer, that might push terminal rate expectations to the downside over time. In that context, though, note that energy, which was the main downside contributor here vs August, can be a low-persistence inflation category.
  • The print did push CHF lower, with EURCHF standing at levels around 0.9417 at the time of writing - around 40 pips higher than pre-release.
  • For details see table: