ZURICH, Dec 2 (Reuters) - Swiss consumer price inflation fell more than expected in November, leaving the way free for the Swiss National Bank to slash interest rates at its quarterly review later this month.
Consumer prices fell 0.7 percent from October and the annual
inflation rate tumbled to 1.5 percent from 2.6 percent, the
Federal Statistics Office said. The November rate was well below
the average forecast of 2.0 percent in a Reuters poll of
economists.
"The fall in the index by 0.7 percent in November is mainly due to the lower oil prices," the statistics office said.
The office said in November that it expects inflation to fall to an average of 1.4 percent in 2008, after previously forecasting 2.6 percent for the year.
"The greater risk to prices is now one of deflation, which may set in as early as the end of Q2 2009," said 4Cast Limited analyst Saara Tuuli.
"We expect that the SNB will not shy away from further cuts and will cut the target rate to 0.5 percent (from 1.0 percent) at their scheduled interest rate announcement next week, with risks of an inter-meeting rate cut alongside the ECB's December announcement," Tuuli said.
The ECB is expected to cut euro zone rates when it meets on Dec. 4.
The Swiss Purchasing Managers' Index survey on Monday showed an easing of cost pressures in the manufacturing industry, with the purchasing price index falling to its lowest level since the survey started in 1995. (Reporting by Katie Reid in Zurich; editing by David Stamp)