Swiss annual inflation slightly weaker than forecast in September

ZURICH, Oct 2 (Reuters) - Switzerland's annual inflation rate remained flat at 0.2% during September, slightly undershooting expectations, official data showed on Thursday.

The consensus forecast of a Reuters poll of analysts was that annual inflation would tick up one tenth of a percentage point from the rate in August to 0.3%.

According to the data published by the Federal Statistics Office, compared to the previous month, the Swiss consumer price index dropped by 0.2%, in line with the poll forecast.

That drop was due to several factors including lower prices for supplementary accommodation and hotels, as well as for international package holidays and air transport, it said.

The data come a week after the Swiss National Bank held its policy rate at zero and forecast that inflation would gradually begin moving upwards moving during next year. The SNB targets an inflation rate of between 0 and 2%.

GianLuigi Mandruzzato, an economist at EFG Bank, said with inflation remaining positive for the fourth consecutive month, the risk of deflation in Switzerland has receded, a situation which would allow the SNB to keep rates on hold for "some time."

Markets currently give only a 7.5% probability that the SNB will cut its 0% interest rate at its next meeting in December.

"The main downside risks to inflation remain the strength of the Swiss franc and weak fuel prices, although the latter would benefit private sector purchasing power and can be looked through by the central bank," Mandruzzato said.