Inflation rate in Switzerland falls to zero: What it means for you

After months of falling inflation, Switzerland has finally reached the baseline: the Federal Statistical Office (FSO) has reported that the annual inflation rate fell to 0 percent in April, further raising the chances of deflation.

Living costs in Switzerland fail to rise in April 2025

In the report, the FSO noted that the inflation rate in Switzerland fell surprisingly sharply in April 2025. Both annual and monthly inflation fell to 0 percent last month, down from 0,3 percent in March and the 0,1 to 0,3 percent rate forecast by financial news source AWP.

The news means that the fundamental cost of living in Switzerland did not change in April. While domestically produced goods are 0,8 percent more expensive now than they were a year ago, imported goods are 2,5 percent cheaper - a phenomenon likely spurred on by the recent boom in the value ot the Swiss franc.

Price rises in Switzerland are balanced out by falling costs elsewhere

Following a peak during 2022 - which saw prices rise at their fastest rate for decades - inflation in Switzerland has fallen precipitously from 2023 onwards, dropping below 1 percent in September last year. While the rest of Europe continues to struggle with inflation above the goal rate of 2 percent, Switzerland’s inflation rate has been below the target since spring 2023.

According to the Federal Office for Social Affairs, the price rises seen in April 2025 were balanced out by cuts in other areas. While the cost of fruit and vegetables at supermarkets, clothing, air travel and personal care products has risen, the cost of hotels, mountain railway trips and tours within Switzerland has fallen.

Is deflation just around the corner?

Looking ahead, Swiss banks have predicted that the government and the national bank (SNB) will try to prevent Switzerland from falling into deflation. These measures include cutting key interest rates for loans and mortgages - something which already began in 2024 and culminated in the rent reductions available to tenants as of March 3 - and taking steps to make the Swiss franc less valuable so that domestic goods and services remain competitive.

Despite their efforts, deflation remains a very real possibility for Switzerland. Though this is initially a positive for consumers as prices do fall, the phenomenon can be catastrophic for the economy and local businesses. 

The thinking goes that as prices drop, people lose their jobs as companies try to cut costs and downsize their operations to afford the lower prices. This means that fewer workers have the money to afford the products, prices drop further, businesses close, and the economy grinds to a halt.

Writing to Watson in December 2024, bank J. Safra Sarasin blamed the looming crisis on the fact that many of Switzerland’s major customers for goods, Germany and the EU especially, are in the midst of their own financial and inflation crises.