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Swiss inflation for June drops within central bank comfort zone

Person filling car with petrol
Petrol prices have fallen significantly, easing the cost of transport. © Keystone / Christian Beutler

The price of goods in Switzerland increased 1.7% in June compared to the same month last year. But while this rise corresponds to the Swiss National Bank’s (SNB) definition of price stability, the annual inflation rate is still forecast at 2.2%.

Inflation continues to stabilise in Switzerland from the 2.8% rise observed for 2022 and the 3.4% levels seen at the start of 2023.

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The cost of food and alcoholic beverages rose 5.1% last month compared to June 2022, the Federal Statistical Office reported on Monday. Housing and energy costs rose 2.9%.

But the price of petroleum products fell by a massive 22.6% year-on-year which resulted in a 3.3% reduction in transport costs.

In its most recent monetary policy assessment on June 22, the SNB predicted inflation weigh in at 2.2% for this year and next before dipping lightly to 2.1% in 2025.

The central bank considers price rises of above 2% to be unstable and so hiked interest rates to 1.75%.

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“Inflation is likely to remain elevated worldwide for the time being. Over the medium term, however, it should return to more moderate levels, not least thanks to the more restrictive monetary policy and due to the economic slowdown,” the SNB stated at the time.

The central bank believes that higher electricity prices and rent, and more persistent inflationary pressure from abroad will keep turning the screw on Swiss consumer prices.

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