Inflation drops in Switzerland to lowest level in 5 years

Inflation rates in Switzerland have dropped to 0,2 percent, the lowest level in five years, according to the Federal Statistical Office (FSO).

Inflation in Switzerland drops to 0,2 percent

According to the latest figures from the FSO, the average annual inflation rate in 2025 was 0,2 percent. The last time inflation in Switzerland was this low was in 2020, after which it rose in 2022 due to the war in Ukraine.

Since 2022, inflation has been decreasing - in 2023 it was 2,1 percent and in 2024 it was 1,1 percent, reports Watson.

“Inflation is likely to remain at a very low level in 2026,” according to UBS economist Alessandro Bee. However, “low inflation alone is not enough to persuade the SNB [Swiss National Bank] to cut interest rates,” Bee continued. Lower interest rates tend to make borrowing cheaper, meaning that people are more likely to spend money and take out mortgages to buy a house.

In 2026, the SNB expects inflation rates to rise slightly to around 0,3 percent and in 2027 to around 0,6 percent, continues Watson.

Price of domestic products rose in Switzerland

In 2025, inflation was at its highest in January at 0,4 percent, after which it declined, partly due to the “uncertainty surrounding Donald Trump's tariff policies and the associated appreciation of the Swiss franc”.

In May, inflation even turned negative and reached -0,1 percent. This is known as deflation and can mean that the price of goods decreases but can be bad for the economy, resulting in an increase in people losing their jobs as businesses cut costs to make up for lower prices. By December, inflation rates had increased to 0,1 percent.

On average, the cost of domestic products in 2025 rose by 0,7 percent, while imported items became cheaper with prices dropping by 1,6 percent.