Swiss Inflation Returns to Positive Territory in June

Switzerland's inflation rate has made a notable return to positive territory in June 2025, marking a shift from the previous month's negative reading. According to the Federal Statistical Office (FSO), consumer prices rose by 0.1% year-on-year, while showing a 0.2% increase on a month-to-month basis. This development brings inflation back within the Swiss National Bank's (SNB) target range of 0-2%, which defines price stability in the Swiss economy.

A notable divergence has emerged between domestic and imported goods prices. Local products recorded a 0.7% price increase compared to June 2024, while imported goods experienced a deflation of 1.9%. This contrast is primarily attributed to falling oil prices and the strong Swiss franc, particularly against the US dollar, which has made imported goods more affordable for Swiss consumers.

The impact of inflation varies significantly across different sectors. Transportation services saw notable price decreases, with car hire dropping by 19% and air transport declining by 11.2% year-on-year. Fuel prices also decreased, with petrol showing a 9.7% reduction. However, the food sector experienced price increases, particularly in fresh produce, with fruit and vegetables rising by 10.7%, and specific items like onions and leeks increasing by 11.9%.

Housing costs continue to be a significant driver of inflation in Switzerland, with rents increasing by 2.6% year-on-year. According to Arthur Jurus, investment director at Oddo BHF Switzerland, excluding rents would put Swiss inflation at -0.5%, indicating deflation in most other sectors. The Swiss National Bank's recent decision to lower its key rate to 0% reflects its commitment to maintaining price stability. Economists project inflation to remain moderate, forecasting rates between 0.1% and 0.3% for 2025, and between 0.2% and 0.9% for 2026.