Switzerland’s inflation data for November has shifted the economic conversation just days before the Swiss National Bank prepares its final interest-rate decision of 2025.
Consumer prices showed no yearly increase, marking the weakest reading in six months.
The figure also underscored how sharply Switzerland’s price environment has cooled since October, when inflation stood at 0.1%.
The latest release arrived as most economists expected either the same pace or a slight rise, putting more focus on how external forces are shaping domestic trends.
The update also comes as currency swings, tariffs, and softening import costs continue to influence the broader economic picture.
Inflation picture shifts
Inflation stalled as energy and fuel prices dropped, alongside a decline in imported goods.
Goods categories broadly saw cost reductions, while services continued to rise.
This contrast shows how global pricing pressures now outweigh local demand conditions.
Core inflation slipped to 0.4%, the weakest reading since August 2021, reflecting a slow-moving trend throughout the year.
The pace has been soft enough to raise doubts about whether the Swiss National Bank’s projected pickup to an average of 0.4% for the quarter will come through.
Currency impact grows
The inflation update follows a period of unsteady performance in Switzerland’s economy.
The country recorded its first quarterly contraction in more than two years during the third quarter, driven by the impact of US President Donald Trump’s tariffs on Swiss products.
A later trade agreement eased some of the strain, and the franc then strengthened to its highest level in a decade against the euro.
The currency’s rise is now feeding directly into lower prices by making imports cheaper, further slowing inflation.
The strong franc is becoming a central issue for policymakers. A firmer currency pulls inflation downward and increases the risk of staying below the 0–2% range targeted by the Swiss National Bank.
With inflation already at the lower boundary, officials face a delicate balance.
They aim to maintain stability without cutting the policy rate below zero, a step that could affect the financial system.
The current rate remains at zero, and a move into negative territory is viewed as a last resort.
Policy signals watched
Despite the weaker inflation data, analysts do not expect a shift at the 11 December policy meeting.
Signals from Swiss National Bank officials match those expectations, as they have said short periods of sub-zero inflation are not a concern.
They maintain that any decision to push borrowing costs below zero would require a very high threshold.
A revival in inflation later in the year may depend on how quickly economic activity rebounds.
The Swiss government expects tariffs linked to the earlier dispute with the US to be lifted this month, but the timeline for recovery is still unclear.
The earlier tariff impact on growth may continue to weigh on the economy for some time.
Even so, many observers have raised their forecasts for next year, betting on stronger momentum once trade pressures ease and global demand improves.
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