In December 2024, Switzerland saw notable changes in its consumer price index, with prices increasing by 1.3% year-on-year, reflecting continued inflationary pressures on the domestic economy. According to preliminary data from the Swiss government, experts expect this increase to be due to several factors, most notably rising energy prices and a slowdown in food prices. At the same time, prices in some other sectors were stable or slightly down compared to the previous month.
Year-on-year changes in the consumer price index
Over the course of 2024, consumer prices rose by 1.3% in December compared to the same month the previous year. This increase is considered relatively moderate, and reflects the mixed effects of several economic factors. Among these factors, energy prices, which saw a slight increase, were the most prominent contributors to this increase. In contrast, there was a slight decrease in prices for manufactured products, which helped balance overall inflation. The increase in food prices also slowed, leading to stable prices in this sector. It is worth noting that prices of services, including transportation and tobacco services, remained stable throughout the year, maintaining the same rates recorded in the previous month. This stability in prices reflects the balance achieved in some economic sectors despite increases in others.
Monthly increase in prices
Over the course of December 2024, the Consumer Price Index recorded an increase of 0.2% compared to November, a limited increase but reflecting a slight improvement in prices after the decline that occurred in November by -0.1%. The rise in prices of services, especially in the transportation sector, mainly explains this increase, as the sector witnessed a significant surge. In addition, energy prices, especially petroleum products, rose, which contributed to pushing prices higher. However, prices of manufactured products declined slightly, which helped limit price increases in general.
Harmonized Consumer Price Index
On the other hand, the harmonized consumer price index rose by 1.8% in December 2024 compared to the same month last year, reflecting a slight increase compared to November, when the index increased by 1.7%. Despite this increase, the index remains within the acceptable limits aimed at ensuring price stability in the Swiss economy.
This harmonized index is an important tool for measuring adjusted inflation that takes into account prices at a broader level that also includes other countries in the European Union. In terms of monthly changes, the harmonized index rose by 0.2% compared to November, after having seen a slight decrease of -0.1% in the previous month. This improvement reflects the continued effects of increases in energy and services prices on the Swiss economy. Expectations also indicate that this increase in the index will continue in the coming months, especially if the rise in oil and gas prices continues.
Factors contributing to the rise in prices
There are several factors that contributed to the significant increase in the Consumer Price Index in December 2024. First, energy prices remain one of the biggest drivers of inflation, with increases in oil
and gas prices affecting various economic sectors, from transportation to industrial production. Some commodities such as food and tobacco also saw their prices increase, pushing overall prices higher.
However, prices in some other sectors are expected to remain stable, such as manufactured goods, which saw a slight decrease in December. This variation across sectors reflects the diversity of economic factors that influence prices in Switzerland. It is worth noting that the Swiss government and the Swiss National Bank will continue to monitor these changes and take appropriate measures to ensure that inflation remains stable.
Future Inflation Expectations
Experts expect inflation in Switzerland to remain moderate. As pressures in sectors such as energy and transportation continue, slight price increases are likely to persist. At the same time, prices in some areas such as manufactured goods may remain stable or see a slight decrease, contributing to reducing the impact of inflation on the overall economy.
The Harmonized Consumer Price Index (HCI) is expected to remain in the range of 1.7% to 1.9% in the coming months, with fluctuations in energy prices and other factors affecting the local and global economy influencing this figure. However, the general expectation is that inflation will remain within acceptable limits and will not cause significant fluctuations.
Monetary policies and government measures
The monetary policy of the Swiss National Bank will remain a key factor influencing inflation rates in the future. The Swiss National Bank will continue to carefully assess economic conditions and make appropriate decisions on interest rates. If inflationary pressures persist, the National Bank may resort to raising interest rates to control inflation levels. However, the Bank will always try to avoid any sharp slowdown in economic growth that could lead to a recession.
The Swiss government is also working to strengthen support programs aimed at reducing the effects of inflation on low-income households. In the same context, authorities may implement measures to limit increases in energy and food prices, which will help ease pressures on the domestic economy.
The results of the Swiss Consumer Price Index in December 2024 are an important indicator of developments in the domestic economy. Despite the slight increase in prices, inflation remains within acceptable limits, reflecting the relative stability of the Swiss economy. Inflation is expected to continue to fluctuate slightly in the near future.