Switzerland: Inflation falls to lowest level since June 2021 in October
Latest reading: Inflation dropped to 0.6% in October, edging down from September’s 0.8%. October’s result marked the weakest inflation rate since June 2021, and was less than a third of the rate in the Euro area amid Switzerland’s ingrained low inflation expectations and mild wage growth.
Annual average inflation ticked down to 1.2% in October (September: 1.3%). Meanwhile, core inflation edged down to 0.8% in October from September’s 1.0%.
Finally, consumer prices fell 0.13% in October over the previous month, smaller than the 0.29% drop recorded in September.
Outlook: Muted price pressures are likely to cause the Central Bank to continue with rate cuts at its upcoming December meeting, in a bid to avoid a return to the deflation that has been recurrent over the past decade.
Panelist insight: Goldman Sachs analysts said:
“Given the SNB’s dovish guidance at its September meeting, benign inflation developments and a rise in geopolitical tensions adding further upward pressure to the currency, we now expect a 50bp cut at the December meeting, followed by an additional 25bp cut in March 2025, to a terminal rate of 0.25%.”