Swiss Franc at risk as growth and inflation decline

Inflation has fallen markedly in Switzerland in 2023.

“Inflation decreased significantly, from 3.2% in the first quarter to 1.6% in the fourth. The average for the year decreased from 2.8% in 2022 to 2.1% in the year under review,” said the SNB in its Annual Report for 2023. 

The latest inflation data for 2024 shows a further fall in inflation, with the Consumer Price Index (CPI) rising by 1.2% YoY in February from the 1.3% registered in the previous month, according to the Federal Statistical Office.  

Overall this is lower than what the SNB expected back at its December meeting, when it said  inflation, which was then at 1.4%, was likely to “increase somewhat in the coming months due to higher electricity prices and rents, as well as the rise in VAT.”

The SNB estimates inflation will average 1.9% in 2024. However, the rate of inflation is currently considerably below that figure at 1.2%. That said, on a monthly basis it accelerated, with CPI up 0.6% in February from 0.2% previously. 

Inflation is also well below the SNB’s first-quarter forecast of 1.8%. 

"Consumer price inflation is running 0.6 ppts below the bank's 1.8% first-quarter forecast, while core inflation of 1.1% is the lowest since January 2022," Reuters reports.