Switzerland consumer prices fall for first time since 2021

Consumer prices in Switzerland edged down 0.1% year-on-year in May 2025, after remaining flat in the previous month, aligning closely with market expectations. This marked the first instance of deflation since March 2021, highlighting a subtle but notable shift in the country’s inflation dynamics.

Switzerland consumer prices fall for first time since 2021

The decline was primarily driven by sharper drops in transport prices, which fell 3.7% compared to a 2.6% decrease in April, reflecting lower fuel costs and easing demand for travel-related services. Additionally, continued decreases in prices for food and non-alcoholic beverages (-0.3%, slightly improved from -0.8% in April) and healthcare (-0.2%, compared to -0.3%) contributed to the downward pressure on overall inflation. Other categories that saw price declines included household goods and services, which fell 2.6% versus 2.2% previously, clothing (-0.3% compared to -0.2%), and recreation and culture (-0.1%, a smaller decline than the 0.7% drop in April). On the other hand, prices in the housing and energy sector rose more moderately, increasing 1.1% compared to 1.4% in the prior month, while restaurants and hotels experienced a smaller price rise of 1.3%, down from 1.6%. Communication costs remained steady, maintaining a 1.0% inflation rate.

Core inflation figures

Core inflation, which excludes the more volatile categories of unprocessed food and energy, eased to a 44-month low of 0.5% from 0.6% in April, signaling subdued underlying inflationary pressures in the Swiss economy. On a monthly basis, the consumer price index inched up by a modest 0.1%, after remaining flat for two consecutive months, consistent with market forecasts and suggesting only gradual price changes in the short term. This slight deflationary trend underscores ongoing challenges for Swiss policymakers, particularly the Swiss National Bank, as they balance the need to support economic growth while managing inflation expectations. Analysts caution that while falling prices may provide some relief to consumers, prolonged deflation risks dampening demand and investment, which could slow economic momentum in the coming months.