Page last updated at 10:28 GMT, Friday, 3 April 2009 11:28 UK

Switzerland experiences deflation

A Swiss franc coin
It was the biggest fall in prices since 1959

Switzerland is experiencing deflation according to official figures.

Consumer prices in March were down 0.4% from a year ago, the Federal Statistics Office said, a 50-year low.

The country has been close to deflation all year, with inflation having fallen from a peak of 3.1% in July 2008. The rate was 0.2% in February.

The Swiss National Bank predicts that inflation will average -0.5% this year and remain close to zero throughout 2010 and 2011.

The deflation was blamed on energy, rent and transport costs all falling as a result of lower oil prices.

The year-on-year price fall for March was the biggest since December 1959, when consumer prices fell 0.6%.

"We forecast that CPI would fall into negative territory, but it is a bit surprising how sharp the fall was in March," said Alessandro Bee, an economist at Sarasin.

"It's predominantly due to the impact of lower oil prices."

The Swiss government is forecasting that the economy will shrink by 2.2% this year.

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