Swiss Central Bank Keeps Close Eye on Food Price Inflation

The Swiss National Bank is keeping a close eye on food price inflation due to this year's record temperatures, but Chairman Martin Schlegel says it's not the main driver of rising prices. The country saw its annual inflation rate double in August to nearly two years high.

Schlegel attributed the increase mainly to petroleum products and expects the impact of hot weather on food prices to be temporary. He said policy measures are being taken to mitigate the effects, and the SNB forecast suggests inflation will decline after a brief spike and remain within its 0% to 2% target range.

The SNB held its benchmark interest rate at 0%, unlike other central banks that have hiked borrowing costs to combat rising inflation linked to expensive fuel. Schlegel said they expect the price of crude oil to decrease, leading to a gradual decline in the effect of higher oil prices on inflation.