Data released on 3 August 2023 showed year-on-year inflation in July falling to 1.6%, down from 1.7% the month before. During the month of July 2023, prices fell 0.1%, which translates to an annualised rate of – 1.2%, well below the Swiss National Bank (SNB) target rate of 2%.
Underlying core inflation, which strips out volatile elements such as energy and food, also slowed to 1.7%, down from 1.8% in June 2023, according to the Federal Statistical Office (FSO). This means both Switzerland’s headline and core inflation rates have been below the central bank’s upper limit of 2% for two months in a row.
The inflation slowdown in July was mainly due to the falling prices of air travel, package holidays and clothing. However, the prices of food and hotels and restaurant meals increased.
July’s annual inflation drop is the fifth in a row. However, many predict that Switzerland’s annual inflation will rebound to 2% by the end of the year, and then remain above 2% until early 2026. A wave of rent and electricity price increases are expected to trickle through over the coming months.
A further interest rate rise of 0.25 percentage points in September is expected by many, and the markets have priced in the possibility of such a hike before the middle of 2024. The Swiss National Bank (SNB) will announce its next rate decision on 21 September 2023.
More on this:
FSO press release (in French) – Take a 5 minute French test now
For more stories like this on Switzerland follow us on Facebook and Twitter.
