Swiss Inflation Slows to 2.8% Before Likely Jump in January

Inflation in Switzerland unexpectedly slowed in December, before a jump in the cost of electricity and health insurance is set to trigger a surge this month.

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Inflation in Switzerland unexpectedly slowed in December, before a jump in the cost of electricity and health insurance is set to trigger a surge this month.

Consumer prices rose 2.8% from a year earlier, the Federal Statistics Office said on Wednesday. That’s below the previous reading and the 3% median forecast in a Bloomberg survey of economists. Core inflation, which strips out volatile elements including energy, accelerated to 2%.

Due to the high share of regulated prices in the Swiss economy, the data are probably just a reprieve before a fresh acceleration in January. The new year allows utility providers to adjust prices and they are likely to pass on increased cost to consumers, according to economists.

State regulator ELCOM has predicted electricity will — on average — become 27% more expensive for households. The average premium for health insurance is set to rise 6.6%, according to the interior ministry.

While inflation has come down from a 3.5% peak in August, it has now been above the Swiss National Bank’s 2% ceiling for almost a year, and averaged at 2.8% in 2022. With the central bank’s price target still elusive — the SNB only sees a return in the final quarter of 2023 — policymakers have already raised interest rates by 175 basis points and hinted at another hike in March.

Based on a gauge harmonized with the European Union, Switzerland’s consumer-price growth stood at 2.7%, about a third of the pace in the surrounding euro area.

–With assistance from Joel Rinneby and Kristian Siedenburg.

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