Inflation rises in Switzerland: could the SNB revise rates? (cross-border guide)

Context

In brief

• Swiss inflation rises to 0.8% in August
• SNB may review monetary policy
• Energy and franc weakness are main factors

Key facts

• What: Increase in Swiss inflation
• When: August 2024
• Where: Switzerland
• Who: Swiss National Bank (SNB)
• Amount: 0.8%

The net increase in inflation recorded in Switzerland in August (0.8%, highest since September 2024) has surprised experts: now everyone is wondering if what is happening will have consequences on the monetary policy of the Swiss National Bank (SNB).

(Keystone-ATS) The majority of analysts do not appear concerned, but there are also those who believe that the institution led by Martin Schlegel will have to abandon the 0.0% level of its benchmark rate earlier than previously expected.

The progression of the parameter calculated by the Federal Statistical Office is mainly due to the increase in energy prices recorded after the failure of the truce between the United States and Iran, says Alexander Koch, analyst at Raiffeisen. "As a result, even in Switzerland, the prices of heating oil and gasoline have increased significantly."

"The increase in inflation is not really worrying," echoes Felicitas Kemeny, head of the economic sector at the State Secretariat for Economic Affairs (Seco). Not least, the transport of petroleum products has become more expensive due to the low level of the Rhine. "The situation should normalize in the near future." There is no general increase in inflation, which remains comfortably within the limits of price stability: the SNB considers such stability guaranteed in a range between 0% and 2%.

Operational details

Several other specialists share this view. Marc Brütsch, chief economist at Swiss Life, attributes the increase in prices not only to energy prices, but also to the weakening of the franc. As a result, the costs of importing certain goods have increased. The second-impact effects on underlying inflation (that which excludes energy, fuels, fresh and seasonal products) are almost imperceptible: the relative rate rose only from 0.3% to 0.4%. “In our opinion, this does not imply any need for the SNB to act,” says Brütsch.

On the same wavelength is Santosh Brivio of Banca Migros. "The decisive question is whether the weakness of the franc leads to a lasting increase in inflation: at the current level, we believe that this risk is limited." According to Reto Cueni, chief economist of SYZ Group, the sharp increase in the prices of foreign goods, with an increase of 1.4% compared to the previous month, shows that inflation continues to come mainly from across borders: domestic prices, on the other hand, remain low. "The National Bank will carefully examine this higher-than-expected figure, but I see almost no reason why it should change its current policy."

However, there are those who do not agree: the soaring of the indicator increases the pressure on the SNB to intervene, says Thomas Gitzel, chief economist at VP Bank.

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

To better understand how inflation and SNB decisions can affect your economic situation, use our calcolatore stipendio. This tool will help you better understand the impact of changes in interest rates and inflation on your income and savings.

Also, if you want to dig deeper into the Swiss economic situation, check out our comparatore CHF/EUR to monitor currency exchange fluctuations and understand how these can affect your investments and spending.

Finally, to stay up to date on the latest economic and financial news, subscribe to our daily newsletter. You will receive all the information you need to make informed decisions and protect your financial interests directly in your email inbox.

Source: swissinfo.ch