ZURICH - Swiss National Bank chairman Martin Schlegel said on Saturday that this year's record heat had moved food prices, and that it had not been the reason inflation rose. In an interview broadcast by SRF, he said the increase so far was almost entirely down to petroleum products.
Annual inflation rose to 0.8 percent in August, the highest reading in nearly two years, and still inside the zero to 2 percent band the SNB treats as price stability. On Thursday the governing board left the policy rate at zero. Schlegel said the bank expects inflation to ease after a temporary rise, and to stay inside that band through the forecast horizon, which runs to mid-2029.
Food prices moved, oil prices explain the index
The hot summer, especially the dry summer, has had an effect on food prices. So far the rise in inflation is almost exclusively attributable to petroleum products.
Schlegel said policy measures were already in place to cushion the harvest shock. Farmers and insurers have spent September counting the cost. Hagel Schweiz put insured crop damage at CHF 59.2 million, in a report published on Thursday. The SNB is watching whether those losses feed further into the index. Schlegel said they had not done so in the figures that justified Thursday's hold.
He also said the recent dip in the franc was a small counter-move after years in which the currency tended to strengthen. The bank assumes crude oil will come back down, and that the energy effect on inflation will fade. That is why a zero rate can sit beside rate rises at other central banks that are answering a sharper fuel shock.
What the SNB is watching next
The next scheduled decision is 10 December. Schlegel did not pre-commit. He repeated that zero was appropriate for the inflation picture in front of the board this week. Readers who want the forecast numbers behind that judgment can start with Thursday's assessment. The summer that produced the food-price question is in our Basel heat report and the Locarno tropical-night count.