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May CPI Preview - Housing & Imported Inflation Focus Again (2/2)

SWITZERLAND DATA
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  • Housing inflation (driven by the rental price index) is expected to increase on the back of December's reference rate hike at some point this spring. As the rental price index appears to only be updated in the second month of a respective quarter, May now seems like the only plausible month this rate hike can come into effect on inflation considering historical lags.
  • For reference, the rental price index increased 0.3% M/M last May. For the yearly rate to increase, this month's uptick would have to be firmer than that - which appears plausible.
  • CHF depreciation stalled in April, so assuming a similar 2-month lag it would have little impact on the June CPI data; while June is not a month in which the rental price inflation increase could intensify as per the quarterly index update.
  • Therefore, Jordan's comments that inflation could potentially come in firmer in Q2 than expected by the SNB seem to be consistent with a slight uptick in headline in May. Some underlying slowdown in inflation might throw this off, however..

MNI, SECO

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  • Housing inflation (driven by the rental price index) is expected to increase on the back of December's reference rate hike at some point this spring. As the rental price index appears to only be updated in the second month of a respective quarter, May now seems like the only plausible month this rate hike can come into effect on inflation considering historical lags.
  • For reference, the rental price index increased 0.3% M/M last May. For the yearly rate to increase, this month's uptick would have to be firmer than that - which appears plausible.
  • CHF depreciation stalled in April, so assuming a similar 2-month lag it would have little impact on the June CPI data; while June is not a month in which the rental price inflation increase could intensify as per the quarterly index update.
  • Therefore, Jordan's comments that inflation could potentially come in firmer in Q2 than expected by the SNB seem to be consistent with a slight uptick in headline in May. Some underlying slowdown in inflation might throw this off, however..

MNI, SECO