Swiss Inflation Remains Low, Negative Rate Pressure Eases
Swiss inflation remained just above zero in January, giving the Swiss National Bank (SNB) some breathing space to avoid pressure to reintroduce negative interest rates. Data from the Swiss statistical office showed consumer prices rose 0.1% year-on-year—the same as in December and in line with economists' median forecast.
On a monthly basis, prices actually fell due to lower accommodation and electricity costs. Electricity rates are expected to be around 4% cheaper nationwide by early 2026, in line with Swiss utility regulations that typically adjust household bills once a year. However, some components continued to rise: hotels, package holidays, and car insurance were all more expensive. Meanwhile, core inflation held at 0.5%, indicating that price pressures remained very limited.
While the headline figure was in line with the SNB's projections for the first quarter, this data underscores the weakness of price growth in Switzerland. SNB President Martin Schlegel even warned that negative inflation was still possible this year. However, SNB officials have repeatedly emphasized that the threshold for lowering interest rates below zero is much higher than a traditional cut—although that option remains open if price stability is threatened.
The SNB has kept interest rates unchanged since June, and most economists believe policy is likely to change towards the end of the year. One of the main factors in Switzerland's weak inflation is the strong franc, which puts downward pressure on import prices in a country heavily reliant on trade. The SNB itself predicts average inflation of only around 0.3% in 2026. Schlegel also highlighted the risk that global safe-haven flows could lead to excessive franc appreciation—and stressed that the central bank is ready to act if such a situation threatens price stability.
By comparison, inflation in the eurozone remains significantly higher than in Switzerland. Based on the European Union's harmonized measure, Swiss inflation was recorded at 0.2% in January.
Source: Newsmaker.id
