Inflation in Switzerland: Definition, Development, Consequences

In August 2026, consumer prices in Switzerland were 0.8 percent higher than a year earlier, according to the Federal Statistical Office (FSO). Annual inflation was 2.8 percent in 2022 and 0.2 percent in 2025.

Inflation is a sustained rise in the general price level for goods and services. At 1 percent inflation, a franc buys roughly 1 percent less. In Switzerland, the FSO measures inflation every month with the Swiss consumer price index (CPI). The Swiss National Bank (SNB) equates price stability with a rise in the CPI of less than 2 percent a year; persistently falling prices also miss the target.

Key facts at a glance

• Inflation in August 2026: The CPI was 0.8 percent higher than a year earlier (FSO, 3 September 2026).
• Annual inflation: 2.8 percent in 2022, 2.1 percent in 2023, 1.1 percent in 2024 and 0.2 percent in 2025 (FSO).
• Price stability: The SNB speaks of price stability when the CPI rises by less than 2 percent a year. A sustained fall in the price level also breaches the target (SNB).
• Policy rate: On 24 September 2026, the SNB left the policy rate at 0 percent (SNB).
• Comparison: On the harmonised index, inflation in August 2026 was 0.9 percent in Switzerland and 3.2 percent in the euro area (Eurostat).

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Inflation explained simply

When the price level rises, money loses purchasing power. If you hold CHF 100 today, after a year of 2 percent inflation it buys only about CHF 98 worth of goods at today’s prices.

How does Switzerland measure inflation?

Every month, the FSO collects the prices of a basket of goods that reflects the consumer spending of Swiss households, from residential rent and food to motor vehicle insurance. Each item is weighted by its share of spending: the more households spend on a good, the more its price counts.

“Inflation” often means average annual inflation, that is, a comparison of the twelve months of one year with the twelve months of the previous year. The FSO also reports the change against the same month a year earlier every month.

The harmonised index of consumer prices (HICP) for international comparison

For comparison with Europe, the FSO also calculates the harmonised index of consumer prices (HICP) under European Union rules. The CPI and the HICP are constructed differently, so their values differ slightly. In August 2026, Swiss inflation was 0.8 percent on the CPI and 0.9 percent on the HICP. A comparison with the euro area therefore requires the HICP on both sides.

Money supply, demand and inflation

In the short term, a larger money supply can stimulate the economy: demand for goods and services rises because people initially have more money available. But if the money supply grows faster than output, prices can rise. High inflation is damaging, because it eats into real income if wages do not keep pace. If demand then falls, companies have to cut costs, often including staff costs.

The consequences of inflation for consumers

Consumers notice inflation mainly because the same money buys less. If a cake from the bakery goes from thirty francs to sixty, the franc has lost half of its purchasing power for that cake.

Sometimes it seems that something has become more expensive without the statistics showing it. This is called “perceived inflation”. This impression is shaped more by frequently bought goods such as food than by rare, large purchases.

Inflation also affects your retirement provision. If the return is below inflation, the retirement savings lose value in real terms, even if the amount on the statement grows.

Reading tip: Retirement provision in Switzerland

Why the SNB tolerates mild inflation

The SNB justifies its definition of price stability partly on the grounds that inflation cannot be controlled or measured precisely. The CPI captures quality improvements only incompletely. Measured inflation therefore tends to overstate true inflation slightly.

High inflation, by contrast, redistributes wealth. Holders of savings accounts and of bonds with a fixed interest rate lose in real terms if the interest rate is below inflation, because their balances then buy less. Borrowers on fixed rates can gain; see the section on credit below.

Inflation in Switzerland in an international comparison

On the harmonised index, annual inflation in August 2026 was 0.9 percent in Switzerland and 3.2 percent in the euro area, according to Eurostat. In the euro area, services made the largest contribution to inflation, and energy came a close second, with prices 14.3 percent above the same month a year earlier (Eurostat).

Inflation on the HICP in August 2026 compared with the same month a year earlier (Eurostat):

• Switzerland: 0.9 percent
• France: 2.6 percent
• Germany: 2.9 percent
• Italy: 3.2 percent
• Euro area: 3.2 percent

Looking back at 2022: a large part of inflation came from abroad

In December 2022, inflation in Switzerland was 2.8 percent compared with the same month a year earlier, according to the FSO. On the harmonised index of consumer prices, which allows comparison with Europe, it was 2.7 percent, and in the euro area 9.2 percent according to Eurostat. For domestic goods, inflation in Switzerland was only 1.9 percent, for imported goods 5.8 percent. A considerable part of inflation was therefore imported.

Why inflation in Switzerland is often lower and more stable

Several features dampen inflation in Switzerland:

• Strong franc: When the franc appreciates, imported goods become cheaper in francs.
• Protected agriculture: Tariffs on agricultural products that are also produced in Switzerland protect domestic producers. Fluctuations in world market prices therefore pass through less directly to food prices.
• Domestic electricity: A large share of electricity comes from domestic hydropower and nuclear energy. The electricity price therefore depends less on gas and oil prices.

What factors influence inflation?

A single factor is rarely responsible for a rise in inflation; usually several circumstances come together:

• Money supply: If the money supply grows faster than output, too many francs chase too few goods, and prices can rise.
• Demand: If demand for certain products exceeds supply, their prices rise.
• Costs: If wages or material costs, for example for building materials, rise, companies pass the higher costs on to customers.
• Currency depreciation: If a country’s own currency loses value, exports become cheaper but imported products become more expensive.
• Wage-price spiral: If wages rise sharply, prices can rise too, which in turn can trigger higher wage demands.
• Political measures: Subsidies for certain products can trigger strong demand. If supply is tight, prices rise.

Background to the rise in 2021 and 2022

With the start of the Covid crisis, demand in the euro area rose for basic goods such as flour, pasta or toilet paper. At the same time, supply chains for raw materials such as timber or metal stalled, and production became more expensive. Interest rates stayed low to support the economy during the lockdowns, and the money supply grew markedly.

In spring 2022, the war in Ukraine accelerated inflation for two reasons:

• Crop and export losses in Ukraine led to food shortages on world markets.
• The restricted gas supplies from Russia pushed up energy costs and made production more expensive.

What does inflation mean for savers and investors?

Inflation reduces the purchasing power of money. For savings and investments, what counts is therefore the return after deducting inflation, the so-called real return.

The impact of inflation on savings accounts

If the interest on a savings account is below inflation, the real interest rate is negative: the balance grows, but its purchasing power falls. Take an assumed inflation rate of 3 percent a year: after two years, CHF 50,000 in a non-interest-bearing account is worth only about CHF 47,100 in today’s purchasing power. Because the account statement shows only the nominal amount, this loss easily goes unnoticed.

The impact of inflation on credit

Inflation reduces the real value of debts, just as it does that of savings. Borrowers on long-term fixed interest rates can therefore benefit from inflation, especially if their incomes rise too. This also applies to the state. Anyone taking out a new loan, on the other hand, often pays higher interest if the SNB has raised the policy rate to fight inflation.

The impact of inflation on bonds

When inflation rises, central banks usually raise interest rates. Newly issued bonds then offer higher coupons, and existing bonds with a lower coupon lose market value. When interest rates fall, the reverse applies. How strongly the bond price reacts depends mainly on the remaining maturity: the longer it is, the greater the effect. Bonds with a floating coupon are less affected because their coupon adjusts. Even bonds from issuers of high credit quality can lose value this way.

The impact of inflation on equities

Companies that can pass higher costs on to their customers tend to cope with inflation better than others. Manufacturers of everyday consumer goods can often do this more easily, because their customers can hardly forgo these goods. Cyclical sectors such as the car industry, on the other hand, often feel the effect early when higher interest rates dampen demand. Rising interest rates can also weigh on the valuation of equities as a whole. Equities do not offer reliable protection against inflation.

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The impact of inflation on the real estate market

The low mortgage rates of the 2010s made buying residential property easier and made investing money in real estate affordable for many.

A simple calculation shows how much interest matters: on a CHF 200,000 mortgage, a difference of two percentage points means additional interest of about CHF 333 a month.

Real estate is a real asset, and its prices and rents can rise with inflation. But it also reacts to interest rates: when rates rise, financing becomes more expensive and valuations can fall. Anyone holding a single property also carries a concentration risk. For rental properties, rising maintenance and financing costs reduce the yield.

Reading tip: Investing in real estate in Switzerland

How do individual investments react to high inflation?

No investment reliably protects against inflation. The asset classes do, however, react differently:

• Equities and equity funds: Prices fluctuate strongly, even over several years. Broadly diversified funds and ETFs reduce the risk of individual securities, but not the risk of the overall market.
• Real estate: It depends heavily on interest rates (see above). For an owner-occupied home, the financing determines how quickly a rise in interest rates comes through: with a fixed-rate mortgage only when the term ends, with a variable-rate mortgage continuously.
• Precious metals: Gold is in demand in crises. Whether it protects against inflation depends heavily on the period considered, because its price fluctuates strongly and it yields no regular income.
• Inflation-indexed bonds: With these, the coupon or the redemption amount is tied to a price index. They are meant to compensate for measured inflation. Their price still reacts to interest rate changes, however, and as with any bond there is a risk that the issuer defaults.
• Accounts and money market: A liquidity reserve loses purchasing power if the interest rate is below inflation, but it is quickly available, for example for unplanned expenses.

The historical development of inflation in Switzerland

The CPI shows how much goods and services have become more expensive compared with the previous month, the previous year or the same month a year earlier. It is a widely followed economic indicator and is used, among other things, to adjust rents, wages and pensions to inflation.

According to figures from the Federal Statistical Office, average annual inflation in Switzerland was:

• 2025: 0.2 percent
• 2024: 1.1 percent
• 2023: 2.1 percent
• 2022: 2.8 percent
• 2021: 0.6 percent
• 2020: -0.7 percent
• 2019: 0.4 percent
• 2018: 0.9 percent
• 2017: 0.5 percent
• 2016: -0.4 percent

High inflation in the First World War and in the 1970s

During the First World War, shortages of goods led to a sharp rise in prices. In 1918, consumer prices averaged twice their June 1914 level. In both 1917 and 1918, they rose by roughly a quarter on the previous year. In the early 1920s, prices fell again.

Until January 1973, the franc was pegged to the dollar. To defend the peg, the SNB had to buy dollars. On 23 January 1973, it stopped these purchases in agreement with the Federal Council. Since then, the franc has no longer been pegged to the dollar. By its own account, this allowed the SNB to bring money supply growth under control, an essential condition for stable prices. Inflation initially kept rising and reached 11.9 percent in December 1973 compared with the same month a year earlier. In 1976, annual inflation fell to 1.7 percent.

What does the SNB expect?

In its conditional inflation forecast of 24 September 2026, the SNB expects average inflation of 0.7 percent for 2026 and 0.8 percent each for 2027 and 2028. The forecast assumes a policy rate of 0 percent over the entire period. The SNB rates uncertainty about the global economy as high, citing the situation in the Middle East. In its assessment, energy prices could turn out considerably higher than expected, which would push inflation up further.

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Frequently asked questions (FAQ)

Can inflation be broken down into individual areas?

Yes. The FSO shows which goods contribute how much to inflation. In 2025, residential rents made the largest contribution to annual inflation, while electricity dampened it the most. How strongly inflation affects an individual household therefore depends on its spending. The FSO offers an online calculator for personal inflation for this purpose.

What can the Swiss National Bank and the state do about inflation?

A key instrument of the Swiss National Bank is the policy rate. If the SNB raises the rate, loans become more expensive and demand eases. The SNB can also intervene in the foreign exchange market and thereby influence the franc exchange rate. A stronger franc makes imported goods cheaper. The state can cushion the effects of rising prices with relief for households or companies.

What does “hidden” or “suppressed” inflation mean?

The term describes price increases that are not yet visible in measured inflation, for example because government measures temporarily cap prices. When the measures end, the price rises show up later.

What is meant by deflation and stagnation?

Deflation is a sustained fall in the general price level, that is, the opposite of inflation. Under the SNB’s definition, deflation also breaches the price stability target. Stagnation refers to a period in which the economy grows little or not at all.

Why is deflation considered more dangerous than mild inflation?

If households and companies expect prices to keep falling, they postpone purchases and investments. Demand falls, companies earn less and cut jobs, and unemployment rises. Debts also weigh more heavily when prices and incomes fall but the amount of the debt stays the same.