Switzerland March-25 CPI Inflation Report

The tariff shock to the Swiss economy resulting from the U.S. administration’s decision yesterday is likely to impact prices later in the year. For now, however, the low inflation outlook persists.

Key takeaways:

• In March 2025, the Swiss Consumer Price Index (CPI) rose by 0.3% year-on-year (YoY), the same increase as in February and slightly below the consensus forecast of 0.4% YoY. On a month-on-month (MoM) basis, the CPI rose by 0% in March, below the consensus forecast of 0.1% YoY increase and lower than February’s 0.6% MoM increase.

• Core CPI increased by 0.9% YoY in March, the same increase as in February. On a month-on-month basis (MoM), core CPI increased by 0.1% MoM in March, relative to February’s 0.7% MoM increase.

• The services sector was the primary driver of rising prices, experiencing a 1.6% YoY increase in March, slightly lower than February’s 1.7% YoY figure. In contrast, the goods sector declined by 1.6% YoY in March, slightly lower than the 1.8% YoY decrease in February.

• Housing rentals have trended upward since November 2023. Since this data is adjusted quarterly, the March release is the same as February’s, with an increase of 3.2% YoY – a figure slightly lower than the 3.4% YoY increase recorded in the period from November 2024 to January 2025.

• The results from March’s release are consistent with a common dichotomy faced by Central Banks in (major) advanced economies: goods prices are in a deflationary territory while service price inflation is slowly adjusting.

• A parallel dichotomy arises in Switzerland by examining import and domestic prices, with import prices declining by 1.7% YoY in March, compared to the 1.5% YoY decrease recorded in February, and domestic prices rising by 1.0% YoY in March (versus 0.9% YoY in February and 1.0% YoY in January).

• Excluding housing rentals, CPI inflation fell by 0.3% YoY in March, the same decline as in February and January.

• From the SNB's perspective, the current release and the February release confirm the low inflation outlook that has led to the further downward revision of the conditional inflation path outlined in its latest monetary policy assessments. Looking ahead, the significant tariff shock to the Swiss economy will be a key factor shaping the inflation trajectory. In the immediate aftermath, markets have responded with an appreciation of the Swiss franc against the U.S. dollar—making imports from the United States more favorable, but further weighing on Swiss exports to the U.S. market

Related Posts

Switzerland February 25 CPI inflation report

Switzerland January 25-CPI Inflation Report (previous release)

Switzerland December 24 -CPI Inflation Report (previous release)

Switzerland November 24-CPI Inflation Report (previous release)

The SNB’s Forward-Looking Compromise (analysis of SNB’s September policy decision)

The SNB’s Challenging Rebalancing Act (analysis of SNB policy and Catch-22 effect for the SNB)

The SNB sets the time (analysis of SNB policy and Catch-22 effect for the SNB)

Review of the Inflation Release

Consumer prices rose by 0.3% year-on-year (YoY) in March 2025, the same increase as in February, and below the consensus forecast of 0.4% YoY. On a month-on-month (MoM) basis, consumer prices increased by 0% MoM, well below the 0.6% MoM increase in February.

Core CPI, which excludes fresh and seasonal products as well as energy and fuels, increased by 0.9% YoY in March (Chart 1), the same increase as in February and in line with consensus expectation. On a month-on-month basis, Core CPI increased by 0.1% MoM, well below February’s 0.7% MoM rise.

Similarly to trends seen in other advanced countries, the services sector, rather than the goods sector, is the main driver of rising prices (Chart 2). Indeed, in March, the services component of the CPI increased by 1.6% YoY, modestly down from the 1.7% recorded in February. Meanwhile – and in stark contrast –the goods sector experienced a decline of 1.6% YoY in March, compared to the 1.8% YoY decrease from February.

Tables 1 and 2 show that, like other advanced economies, housing rentals are the main driver of inflation (Chart 3). In Switzerland, this CPI component is adjusted quarterly and remained unchanged in March relative to February, posting a 3.2% YoY increase, down from the 3.4% YoY observed during the November- December- January period. As previously discussed, the trajectory of the housing rental component is closely tied to the policy rate. Given the series of rate cuts over the past year, the moderation observed since the August- October 2024 peak is hardly surprising. Nonetheless, this component continues to play a central role in shaping CPI dynamics. Thus, excluding housing rentals, the CPI index declined by 0.3% YoY in March, in line with the 0.3% YoY declines recorded in both February and January 2025.

Another important classification from Switzerland's perspective is the distinction between domestic and imported inflation (see Chart 4). In March, domestic inflation rose by 1.0% year-on-year, slightly higher than the 0.9% YoY recorded in February. On a monthly basis, domestic inflation declined by 0.1% MoM versus February’s 0.5% MoM increase. In contrast, imported inflation declined by 1.7% YoY in March, below February’s 1.5% YoY decline. On a monthly basis, imported inflation increased by 0.5% MoM in March versus February’s 0.9% MoM increase.

The Swiss Federal Statistical Office also publishes the Harmonized Index of Consumer Prices (HICP), constructed using a methodology common to EU and EFTA member states, which facilitates international inflation comparisons. In March 2025, the HICP rose by 0.1% year-on-year, the same rate as the 0.1% increase recorded in February.

Summary

The report presents a similar disinflationary outlook as the previous releases. In addition to the ongoing deflationary trend in goods and the effects of imported inflation, domestic inflation has stabilized around 1.0% in the last three months. Moreover, the higher monthly reading at the core and domestic inflation levels are mainly driven by the housing rental component.

An additional indicator of the almost deflationary context is the behavior of CPI inflation, excluding housing rentals. In March, this measure decreased by 0.3% YoY as in February and January.

The Swiss National Bank’s next monetary policy decision is scheduled for June. Switzerland has been hit with a steep tariff rate from the United States—32% on top of the baseline 10% applied to all countries. The effects of this tariff shock may begin to appear in the inflation data for May and June. As such, it remains too early to draw implications about the likely course of SNB policy at this stage.

Table 1: CPI by components (% YoY)

Source: Swiss Federal Statistical Office (FSO).

Table 2: CPI by components (% MoM)

Source: Swiss Federal Statistical Office (FSO).