Swiss inflation cools to 0.5% as energy prices ease in June

Switzerland's annual inflation rate fell to 0.5% in June, the first decline since energy prices surged after the outbreak of the Iran war, supporting the central bank's view that medium-term price pressures remain contained.

The consumer price index rose 0.5% from a year earlier, down from 0.6% in both April and May, the Federal Statistical Office said Thursday. The reading matched the consensus estimate. On a monthly basis, prices were unchanged after a 0.2% increase in May. The index stood at 101.3, using December 2020 as its base of 100.

"The small fall in annual inflation reinforces comments by Swiss National Bank Chairman Martin Schlegel, who said at last month's monetary-policy meeting that medium-term inflation pressures have remained largely unchanged, despite the energy-price surge prompted by the Middle East conflict," the central bank said in its June statement.

Prices of petroleum products rose 15% from a year earlier but declined from May, while air transport costs — particularly exposed to global energy prices — also fell month over month. Hotels and car rentals recorded price increases, the FSO said. Core inflation 1, which strips out food, beverages, tobacco, seasonal products, energy and fuel, held steady at 0.3% year over year. Core inflation 2, which also excludes administered prices, edged up to 0.5% from 0.4% in May.

The June reading marks a departure from the acceleration seen in April and May, when annual inflation hit 0.6% — the highest since 2024 — as the Iran war drove up crude and refined product costs. Switzerland, which imports virtually all its petroleum, is particularly exposed to global energy price swings, though the pass-through to broader consumer prices has remained limited.

The last time Swiss inflation ran above 0.6% was in mid-2024, when the SNB was still in an easing cycle. The central bank cut its policy rate by 25 basis points to 1.0% in March 2025 and has held steady since, with the current trajectory of inflation supporting that pause. Overnight index swaps price a roughly 40% probability of a further 25-basis-point cut by December, according to data compiled by Bloomberg.

For the SNB, the data validates the assessment Schlegel laid out in June: that the energy-price shock from the Iran conflict was unlikely to feed into a sustained inflationary spiral. Switzerland's inflation has remained below the SNB's 0-2% target range for most of the past two years, and the June print keeps it comfortably inside that band. The central bank's next policy meeting is scheduled for September.

This article is for informational purposes only and does not constitute investment advice.