Switzerland inflation rate above forecasts

Consumer prices in Switzerland rose 0.2% year-on-year in July 2025, slightly above market expectations of a 0.1% increase and accelerating from a 0.1% rise in June. This marked the second consecutive month of inflation after a brief deflationary period earlier in the year, signaling a gradual return of price pressures, albeit from historically low levels.

The uptick was driven by continued price gains in several key categories. The cost of restaurants and hotels remained firm at 1.6% year-on-year, reflecting sustained demand in the hospitality sector during the summer travel season. Housing and energy prices, although easing slightly, still rose 1.0%, supported by higher maintenance and utility costs.

Communication prices climbed 1.0%, up from 0.9% in June, while recreation and culture saw a notable shift from a -0.1% decline in June to a 0.7% increase in July, boosted by strong demand for domestic leisure activities.

However, these gains were partially offset by continued declines in several sectors. Food prices fell by 0.6%, reversing a flat reading in June, as favorable harvest conditions and easing supply chain pressures contributed to lower grocery costs. Transport prices declined further (-2.4% vs -3.7%), weighed down by cheaper fuel and reduced public transportation fares. Furnishing and household equipment prices dropped 1.3%, while healthcare remained slightly negative at -0.1%.

Notably, core inflation—excluding volatile items such as unprocessed food and energy—rose to 0.8% in July, the highest since March, from 0.6% in June, suggesting that underlying price pressures are beginning to firm. Still, core inflation remains well below the Swiss National Bank’s (SNB) 2% target.

On a monthly basis, consumer prices were flat in July, defying market forecasts of a 0.2% decline and following a 0.2% gain in the previous month. Increases in costs for private transport, hotels, and supplementary accommodations were balanced out by seasonal discounts in clothing and footwear and falling prices for overseas package holidays.

While the latest data suggests inflation is slowly gaining traction, the overall price environment in Switzerland remains subdued. Combined with soft manufacturing data and escalating trade tensions—particularly in light of the new US tariffs on Swiss exports—analysts expect the SNB to maintain a dovish stance. Further monetary easing, including a possible rate cut deeper into negative territory, remains on the table if disinflationary risks persist or global growth slows further in the second half of the year.