CHF
The finer details of January CPI show underlying strength in Swiss inflation that goes beyond the higher-than-expected core print. Volatile factors may have played a part and could reverse in February, however even when these one-offs are excluded, we still see core CPI running ahead-of-expectations.
- Core inflation contributed 0.19pp to the headline (which accelerated to 0.87% from December's 0.66% against consensus expectations for a slowdown to 0.6%) of which, 0.13pp came from services - a considerable acceleration (Services exc. rents marked in the dark blue bar in the first chart below). The question is if this acceleration will be persistent or not.
- The 0.13pp appear to be largely driven by only a small set of categories: Airfares and rental cars, which contributed 0.05pp each more to headline than in December, and both these categories can be volatile.
- As such, some of the services acceleration thus has the potential to reverse in February. Nevertheless, even if the 0.1pp positive contribution from rental cars & airfares had not have occurred, core would have come considerably above analyst expectations in January - so the print appears overall firm.
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