Swiss inflation rate falls dramatically, but salaries can't keep up
New data released by the Federal Statistical Office (FSO) has revealed that the rate of inflation in Switzerland fell significantly in May 2023. After achieving record highs at the start of 2023, the inflation rate has returned to levels last seen before the invasion of Ukraine.
Inflation rate in Switzerland falls again
According to the data, published in Watson, year-on-year inflation in Switzerland fell from 2,6 percent in April to 2,2 percent in May 2023. This is a significant climbdown from the start of 2023, when inflation stood at 3,4 percent in February. Core inflation - that is the rate calculated without food, energy or fuel prices - fell to 1,9 percent by the end of May.
At the same time, the consumer price index provided by the FSO indicated that the rising cost of living for families and individuals in Switzerland has stagnated over the last month, with the index rising by just 0,3 percent in May. The FSO told Watson that the increase was mainly caused by, among other things, the rising cost of renting a house or apartment, and the heightened cost of air travel and holidays abroad.
Swiss salaries unable to keep up with inflation
When it comes to consumer goods, while some products - especially seasonal foods produced domestically - have seen prices rise significantly, the cost of other goods like fuel and telecommunications services have plummeted. In all, domestic goods now cost 2,4 percent more than they did a year ago, while imported product prices - helped along by the strength of the Swiss franc - only rose by 1,4 percent.
However, it remains unlikely that people in the alpine nation will benefit much from the falling inflation rate: a recent report by the FSO forecasts that salaries in Switzerland are set to rise by just 1,8 percent in 2023. While it won’t be as extreme as the dramatic loss in purchasing power seen last year, experts in the government told Watson that workers will still be worse off by the time the year is over.
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