Inflation Continues to Decline
Published: Thursday, Aug 3rd 2023, 10:40
Updated At: Friday, Oct 13th 2023, 14:12
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In July 2023, the annual inflation rate in Switzerland decreased to 1.6% from 1.7% in June, according to the Federal Statistical Office (BFS). This decrease was mainly due to lower import prices. However, economists are still cautious as the inflation rate is not yet under control. The inflation rate had been steadily increasing since the beginning of the year due to higher raw material prices and supply shortages, reaching a peak of 3.4% in March. Since then, it has been steadily decreasing and in June it was already below the 2% threshold, which is generally considered the upper limit for price stability. The main factor behind the decrease in inflation in July was the statistical effect of the Russian attack on Ukraine, which had caused energy prices to rise. Looking ahead, there are several inflation drivers in the coming months, such as higher reference interest rates, which will lead to higher rental costs, and higher electricity tariffs, which can only be adjusted at the end of the year. The Swiss National Bank (SNB) is expected to take further preventive action in September by raising interest rates by a quarter of a percentage point to 2%. However, it is suggested that the SNB should wait and see if rising rents will lead to a further increase in inflation, as predicted in its last forecast.nnnn
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