In March, prices in Switzerland showed stability, remaining unchanged compared to the previous month and registering only a slight increase over the year. The Federal Statistical Office reported that annual inflation slowed, with prices rising by 1% compared to the previous year, which was lower than expected and slower than the 1.2% measured in the previous month. This marks the slowest inflation rate since September 2021, validating last month’s surprise rate cut from the Swiss National Bank (SNB).
Annual core inflation, excluding volatile items such as food and energy prices, also slowed to 1% from the previous 1%. The statistical office attributed the index’s stability compared to the previous month to opposing trends offsetting each other.
While food and non-alcoholic beverages became cheaper compared to the previous month and year, there was a decline in healthcare prices and household goods and services. Conversely, energy and fuel prices rose, as did the cost of clothing and footwear, international package holidays, and air transport.
The Swiss National Bank’s decision to cut its benchmark rate to 1.5% in March was justified by persistently below-target inflation since June 2023. The bank has revised its expectations, forecasting inflation to average 1.4% in 2024, 1.2% in 2025, and 1.1% in 2026.
While Switzerland hasn’t experienced dramatic inflation for decades, unlike other parts of Europe, where prices rose significantly, the inflation rate could slightly increase in the coming months. However, SNB Governor Thomas Jordan believes there is “minimal risk” of prices accelerating past the 2% mark.
Following the release of inflation data, the Swiss franc weakened considerably against the euro, indicating the market’s response to the unexpected inflation figures. Analysts suggest that the SNB’s easing path remains data-dependent, especially as the effects of looser monetary policy filter through into the economy. Today’s weaker inflation readings suggest the bank should continue on a sustained easing path.
