|Definition||An indicator released by the Swiss Federal Statistical Office once a month and measures the change in the price of a basket of goods and services over a period of time â€“ usually a month or a year â€“it is considered the most important indicator of inflation in |
Swiss National Bank inflation target is set at 2.00% and due to that proper measures are taken to preserve prices among this rage. As a result if prices increase above the limit set by the Bank it indicates that the purchasing power of the Swiss Franc is retrieving due to high market liquidity, accordingly the Swiss National Bank raises interest rates which will attract more investors to the currency and thus raises its value. From here we find that the Swiss Franc reacts positively with increased prices and vice versa.
On the other hand raising inflation indicates economic growth. Thus the index primary reflects the increase of demand by individuals on goods and services which indicates high economic confidence and income, which supports GDP to increase and indicates high employment rate and that the cash flow in the economy is also high. This will force industries to increase their productivity and profit more. All those factors indicate that the economic cycle is growing.
|Best Case Scenario||Switzerland is scheduled to release its CPI in which expectations show that they will rise from their prior decline and the best case scenario would be if they came in higher than expectations as this will mean that deflation risks are easing.|
|Worst Case Scenario||The worst case scenario would be if CPI stays in the negative side as this further triggering deflation risks that were a result of plummeting energy prices and crippled consumer demand in nation which forced producers to cut prices to attract buyers.|