Inflation in Switzerland fell further in March – to one percent. In February it was 1.2 percent. This means that goods and services were one percent more expensive in March than in the same month last year. Economists told the AWP news agency they were surprised by this reduction: They had expected inflation of 1.2 to 1.5 percent. The Federal Statistical Office’s national consumer price index shows that travel, shoes and clothes in particular became more expensive last month. Cars, for example, cost less.
Inflation had already fallen in January and February. Inflation in Switzerland peaked at 3.5 percent in the summer of 2022. In June 2023 it fell below the 2 percent mark for the first time since January 2022.
More expensive apartment rents
Core inflation, which excludes, among other things, the volatile prices for energy and fuel, also fell in March. It fell to 1.0 from 1.1 percent.
In the area of domestic goods, inflation was 1.8 percent, slightly below the previous month’s figure. In the area of foreign goods, inflation was -1.3 percent, well below the previous month’s figure.
Among the individual product groups, apartment rents stand out, increasing by 2.8 percent compared to the previous year. On the other hand, petroleum products have become cheaper.
More leeway for the SNB
All in all, the price pressure in Switzerland appears to be “very relaxed,” is the conclusion of Raiffeisen chief economist Fredy Hasenmaile. Some economists speculate that current inflation is probably below the SNB’s forecasts. This increases their scope to further reduce the key interest rate after the surprising cut in mid-March, say various experts.
At that time, she reduced the interest rate to 1.5 from 1.75 percent because of the reduced inflation. “Further interest rate cuts by the SNB in June and September are almost certain,” says Safra Sarasin economist Karsten Junius.
And UBS expert Maxime Botteron also sees the latest inflation figures as confirmation of his forecast “that the SNB will make two more interest rate cuts this year in June and September in order to achieve a rate of 1.00 percent”.