Swiss inflation accelerated far more than analysts anticipated to the fastest pace since September 2024, suggesting a weaker franc is feeding through to the economy.
Consumer prices rose 0.8 per cent in August from a year earlier, up from 0.4 per cent in July, Switzerland’s statistics office said on Sept 3. The result was higher than every single forecast of 16 economists in a Bloomberg survey.
The reading is the last that Swiss National Bank officials will see before their interest rate decision later in September.
While the result notably exceeded expectations, it remains consistent with the average for the current quarter predicted by the central bank.
The pickup in inflation will be welcomed by policymakers in a country where consumer-price growth has often been feeble and even turned briefly negative in 2025.
The outcome still underscores how benign the Middle East energy shock has been for Switzerland at a time when its neighbours are seeing costs surge.
In the euro area that surrounds the country, consumer prices rose 3.3 per cent in August, the highest in almost three years. Following the harmonised European methodology, that compares to a Swiss rate of 0.9 per cent.
The SNB has predicted a mild, temporary acceleration of consumer-price growth that may now be assisted by the weaker franc, which this week reached a one-year low against the euro.
The franc extended gains after the data to rise as much as 0.4 per cent to 0.9385 per euro, after the Sept 2 0.9435 low.
With rates at zero, the central bank expects the quarterly average to peak at 0.8 per cent by early 2027, comfortably within its targeted range of 0 to 2 per cent.
In August, predominantly petroleum products became markedly more expensive, with their prices now being some 25 per cent higher than in 2025, the statistics office said.
Also, imported products for the first month contributed more to inflation than domestic ones, illustrating how a weaker franc is feeding through to consumers.
So-called core inflation, which excludes volatile elements such as energy, picked up more muted than the headline rate to 0.4 per cent, from 0.3 per cent. That is the first acceleration in 2026.
The reading coincides with a potential upswing of the Swiss economy. Output adjusted for major sports events expanded by 1.5 per cent in the second quarter, five times more than had been expected.
That growth was driven by exports, particularly in pharma and chemicals, according to a detailed breakdown of drivers published on Sept 3.
Manufacturing contributed more than services, which is unusual for Switzerland. Government spending outpaced private consumption for a third quarter.
While economists initially questioned if the strong GDP reading might be an outlier rather than a sustainable acceleration, a key leading indicator of growth has reached the highest level in almost five years.
Also, wages appear to keep rising, outpacing inflation, and manufacturing in August exceeded expectations.
The Sept 3 data prompted economists at UBS to boost their growth forecast for Switzerland. They now expect sport-event adjusted expansion to be 1.8 per cent in 2026, compared to 0.7 per cent predicted so far. The 2027 growth is now seen at 1.5 per cent, according to a note.
Helping the outlook for export-focused Switzerland is a trade deal with China that will remove almost all tariffs on goods bound for Asia’s biggest economy.
The agreement, which has yet to be ratified, envisions Swiss signature goods including watches, pharmaceuticals and precision instruments being imported fully duty-free.
While the Iran war prompted a surge in the franc earlier in 2026 that alarmed the SNB enough to spark interventions to stem the gains, the currency has dropped against the euro since then. Officials have still kept up the threat of cutting borrowing costs below zero if necessary.
In July, Bloomberg reporting indicated that inside the SNB the rate is expected to stay at zero through 2027 before it then probably rises. That view is still in line with what most economists predict.
“Price risks have shifted to the upside in Switzerland as well,” Thomas Gitzel, chief economist at VP Bank in Vaduz, said in reaction to the inflation data.
“A rate hike in December cannot be completely ruled out.” BLOOMBERG
