After falling consistently throughout the last year, inflation in Switzerland has now fallen to the lowest rate seen in nearly four years. Though imported goods are becoming cheaper, living costs are continuing to creep up.
According to the Federal Statistical Office (FSO) the annual inflation rate in Switzerland fell from 0,4 percent in January to 0,3 percent in February 2025. This is the lowest rate of inflation reported since April 2021.
While goods and services produced in Switzerland are still 0,9 percent more expensive than they were a year ago, imported goods are 1,5 percent cheaper. Having risen to a high of 3,5 percent in August 2022, rates unseen since the global financial crisis of 2008, rates fell to 1,7 percent by mid-2023 and 1,3 percent by April 2024. They fell below 1 percent in September 2024 and have continued to decline since.
However, a fall in inflation does not mean that prices are falling, only that they are rising at a slower rate. The FSO noted that the consumer price index - the metric which tracks the cost of living in Switzerland - rose by 0,6 percent between January and February 2025.
In the last month, the cost of holidays, flying and rent have been the main contributors to the rising cost of living. Clothing, medicine, luxury goods and some foodstuffs have also become more expensive in recent weeks.
By contrast, the biggest price drops were reported for hotel stays, berries, second-hand cars and the fees for banking services. Personal care products and imported red wine also became cheaper over the last month.
Looking ahead, Swiss banks have predicted that 2025 will see federal authorities take significant measures to stop inflation from falling further and to stimulate the economy. These include cutting key interest rates for loans and mortgages - something which already began in 2024 and culminated in the rent reductions available to tenants in Switzerland as of March 3 - and taking steps to make the Swiss franc less valuable so that domestic goods and services remain competitive.
Nevertheless, some have raised the prospect of deflation. Although this is positive for consumers as prices do fall, the phenomenon is catastrophic for local businesses, who will be forced to lay off workers to afford the lower prices. 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.
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