Switzerland’s price growth softened in July, defying a general spike across Europe. Consumer prices climbed 0.4% compared to a year ago, down from 0.5% in June and matching the median forecast from economists, according to data from the Swiss statistics office. The drop was driven by cheaper retail goods and services, which offset rising energy costs.
Diesel and heating oil prices did climb, but lower prices for everything from t-shirts to rental cars helped keep the overall rate down. Core inflation, which strips out energy and food, stayed flat at 0.3%, a sign that the Swiss economy is not yet feeling broad pressure from global inflation trends.
Bank expects calm ahead, but not for long
The Swiss National Bank had expected a temporary rise in prices, but the slowdown could buy officials some breathing room. That target has been a buffer against broader European inflation, which hit 2.9% in the eurozone in July—far above Switzerland’s 0.7% when measured on the same method.
The SNB is preparing for a future rate hike. Sources say borrowing costs could begin to rise next year if economic conditions remain stable. Officials have also indicated they’re ready to weaken the Swiss franc further by selling it, if needed, to avoid an inflow of capital that might cool the currency.
What’s coming next from the SNB
Policymakers have already spent 3.9 billion francs in the first three months of this year to hold the franc down. Second-quarter intervention figures are scheduled to come out at the end of September. For now, the central bank remains cautious, with no immediate rate change expected. The current policy is keeping Swiss prices under control—even as energy costs rise in other parts of Europe.