Swiss retail sales rose less than expected to an annual pace of 0.7% in June after rising 7.4% in May. Record high food and energy costs continue to sap purchasing power, and led consumers to cutback spending on discretionary items such as clothing and furniture. As the Swiss Nation Bank faces its highest rate of inflation in 15 years, the central bank may be forced to sit on the sidelines as downside growth risks become a major concern for the economy. However, the current decline in oil prices may help to curb inflation in the second half of 2008, allowing the central bank to hold the benchmark interest rate at 2.75% for the rest of the year.
