Switzerland’s Inflation Slows for First Time in Eight Months
(Bloomberg) — Swiss inflation slowed in June for the first time in eight months, suggesting the impact of lower oil costs are feeding through to the domestic economy.
Consumer prices rose 0.5% from a year earlier, down from 0.6% in May. The number matches the median expectation of economists surveyed by Bloomberg.
Rising costs for vegetables, hotels and car rentals were offset by flights, heating oil and diesel, Switzerland’s statistics office said on Thursday. So-called core inflation, which excludes volatile elements such energy, held at 0.3%.
While the headline outcome is below the Swiss National Bank’s average forecast for this quarter, it remains comfortably within the range of 0-2% targeted by officials. They predict a mild inflation pickup this year, albeit with no change in medium-term pressures.
The data reflect a month when the external strains of higher energy costs and haven inflows into the franc showed signs of subsiding. The report also highlights how benign the oil shock has been in Switzerland compared with neighbors such as the euro zone, where price growth is much higher.
What Bloomberg Economics Says:
“The slowdown in Swiss inflation reflects a deceleration of services prices, partly seasonal, as well as some early easing in energy prices. The weaker franc since March has not yet translated into higher imported price pressure. Still, we expect the price dynamic to gradually re-accelerate as of 3Q26, peaking in late 2026 and averaging 0.6% over the year, as the effect of the franc’s previous appreciation fades.”
—Jean Dalbard, economist. Click here for full REACT
With interest rates at zero, Swiss officials are using currency interventions as a more active tool for now to avoid too-low inflation caused by the effect on the cost of imports from the strength of the currency.
Last month, policymakers reiterated their position of “heightened willingness” to sell the franc, a stance they have maintained ever since outbreak of the Iran war. In the first quarter, which included the first month of the conflict, the SNB sold 3.9 billion francs ($4.8 billion), it said on Tuesday.
The euro region measures consumer prices based on a harmonized rate. Using the same methodology, the Swiss inflation rate for June was 0.7% on a year-on-year basis. That compares with 2.8% in the surrounding currency zone.
–With assistance from Harumi Ichikura, Joel Rinneby and Kristian Siedenburg.
(Adds Bloomberg Economics after fifth paragraph.)
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