Neuchatel, Switzerland, Jan. 4 (Bloomberg) -- Swiss consumer prices were unexpectedly unchanged last month from the month before, keeping inflation below the central bank's limit. Prices increased 0.3 percent compared with the same month last year, the Federal Statistics Office said in a report released in parliament. Inflation averaged 1 percent last year, less than the 1.6 percent in 2000. Inflation below the 2 percent ceiling set by the central bank means its governors have room to reduce interest rates in a bid to spur growth. Last year, the bank cut rates by 1.75 percentage points in four steps, as the economy showed signs of slipping into a recession. ``There's neither a threat to price stability nor for a deflation spiral,'' said Nannette Hechler-Fayd'herbe, head of Swiss fixed-income research at Credit Suisse First Boston. The Swiss National Bank in its last monetary policy report on Dec. 7 said inflation will average 0.9 percent this year, with a growth rate of about 1 percent, down from 1.5 percent in 2001. The Swiss economy barely grew in the third quarter and may have shrunk in the fourth, the government says. Exports and investments were hurt by a slowdown in the world economy. Still, Aymo Brunetti, the head of economic analysis at the economics ministry's State Secretariat for Economic Affairs, said in an interview yesterday that Europe's seventh-biggest economy will avoid a recession this year, as exporters benefit from the expected recovery of the U.S. economy. The Swiss Purchasing Managers' Index for December published yesterday showed the first increase since August and indicating that industry may have seen the worst of the slowdown. ``We have reached the floor at 1.75 percent for the 3- month Libor rate and see a step up again in the fourth quarter to a 2 percent target rate,'' said Daniel Scheibler, the chief economist at Bank Sarasin & Cie. in Zurich. Semiconductor-related companies based in Switzerland rose this week, on optimism that a price increase for computer chips by Hynix Semiconductor Inc. is a sign of reviving demand in the industry. Shares of Unaxis Holding AG, the biggest Swiss information- technology company; Esec Holding AG, which makes equipment used to manufacture semiconductors; and Micronas Semiconductor Holding AG, Switzerland's largest chipmaker, all rose. The inflation rate, which declined from 1.3 percent in January to 0.3 percent in December last year, was pulled down by a 1.2 percent decline of prices for imported goods. Goods produced and sold in Switzerland rose 1.7 percent. Declining oil prices were the biggest brake on inflation in December, as they were during much of the second half of 2001, when inflation slowed from its high of 1.8 percent in May. Heating oil fell 8.7 percent from November, and 35 percent from a year earlier. Gasoline prices dropped 1.5 percent in the month and 11 percent in the year. The decline of the Swiss franc versus the euro, reversing some of the gains the currency made after Sept. 11, also gives exporters some breathing space, while making imported goods cheaper. The European Union is Switzerland's biggest trading partner. Swiss inflation in December was about 1.8 percentage points lower than inflation in the 12 nations sharing the euro, according to the median forecast of 10 economists surveyed by Bloomberg News. This gap, which Hechler-Fayd'herbe said was partly attributable to the strong franc, helps the Swiss monetary authority to keep Swiss interest rates below European benchmarks. The yield on the Swiss benchmark 10-year government bond rose 2 basis points to 3.42 percent today, which is about 150 points below the German equivalent. The franc traded at 1.4799 francs per euro, down more than four centimes from the record 1.4395 reached on Sept. 21, when investors switched funds into Swiss securities and cash. The Swiss franc is a traditional safe haven, because of its political neutrality and monetary stability coupled with low inflation.