Swiss Retail Sales Improve
The Swiss Federal Statistics Office has released the Real Retail Sales figure for the month of March. Year on year this number has come in at a healthy 3.0% growth, which represents a definite acceleration of this metric over the previous month’s 1.2%, market economists had only anticipated a 2.4% expansion. The increase in monthly Overall Retail Sales however slowed from 1.2% in February to just 1.0% in March.
Looking at the break down of this data it can be seen that the Ex-Fuel figure rose from 1.3% in February to 3.1% in March while the Food, Beverages and Tobacco component grew 0.8% on the month. The largest performer was the Non-Food element that expanded by 4% on the month.
This growth in Retail Sales activity augers well for future price activity in a country that has been struggling with sub zero inflation rates for over two years. The Swiss National Bank (SNB) will be relieved by this morning’s data as it has limited monetary policy instruments available to further stimulate activity within the economy. Interest rates in Switzerland have been below 1% for almost 5 years and have spent the last 2 years at 0%.
The SNB has been using exchange rate policy as a means to keep the Swiss Franc artificially low in a bid to create some trade lead growth within the economy and stave off deflation. The EURCHF 1.20 artificial floor has been aggressively defended by the SNB over the past two years and looks set to remain a key feature of the Bank’s policy for the foreseeable future. Last week the SNB chairman, Thomas Jordan, restated the Bank’s commitment to maintaining this floor level, in a message to speculators Jordan noted that that the SNB remains prepared to purchase foreign currency in ‘unlimited quantities’ in order to ensure that this minimum exchange rate level remains intact.
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