ZURICH, Sept 26 (Reuters) – This year’s record temperatures have had an impact on food prices but have not been a factor behind rising Swiss inflation, Swiss National Bank Chairman Martin Schlegel said in an interview broadcast on Saturday.
Switzerland’s annual inflation rate doubled in August to its highest in nearly two years, raising concerns about smaller harvests and lower water levels on transport routes like the Danube and the Rhine making food more expensive and driving up prices overall.
The SNB is closely monitoring the impact of the hot weather on food prices, Schlegel told radio station SRF.
“The hot summer, especially the dry summer, has had an effect on food prices — you can certainly see that there have been certain price movements,” Schlegel said.
“There are also policy measures taken to counteract that, and so far the rise in inflation is almost exclusively attributable to petroleum products,” he added.
The SNB held its benchmark interest rate at 0% on Thursday, even as other central banks hike borrowing costs to tackle rising inflation linked to more expensive fuel.
It could do this because the SNB expects inflation to decline after a temporary increase, and remain within its 0% to 2% target to the end of its forecast range, which runs to mid-2029, Schlegel said.
“We assume that the price of crude oil will come back down, and that simply means that the effect of a higher oil price at the moment gradually fades out a little over time,” he said.
Schlegel also said the recent downturn in the value of the franc was a small change after years of appreciation.
“There have been long periods when the franc actually became a bit stronger almost constantly,” he said. “What we’ve just seen is a minor counter-trend.”
(Reporting by John Revill; Editing by Kirsten Donovan)
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