Switzerland’s Inflation Slows in June: Impact on Oil Prices, Rent Increases, and Future Forecasts

2023-07-03 13:03:03

Inflation continued to slow in Switzerland in June, returning to the zone defended by the Swiss National Bank (SNB). The slowdown in prices was further supported by the decline observed in petroleum products, while food prices continue to accelerate.

Consumer prices rose 1.7% in June year on year, following rising 2.2% in May and peaking at 3.5% in August 2022. This is the first time since January 2022 for inflation to fall back below 2%.

A slowdown was also observed over one month, with an increase of 0.1% recorded during the period under review, following +0.3% in May, the Federal Statistical Office announced on Monday.

These figures are in line with economists’ forecasts. The experts were counting on an increase in prices between 1.6% and 1.9% over one year and a monthly variation of 0.0% to 0.3%.

The price of oil is skyrocketing

In detail, the slowdown in the inflation rate in June was once once more supported by the fall in the price of petroleum products (-22.6% over one year). Fuel oil (-34.7%), gasoline (-19.8%) and diesel (-19.1%) thus posted sharp declines.

Other expenses, however, continue to increase, including food and beverages (+5.1%), housing and energy (+2.9%), as well as restaurants and hotels (+3.3 %). The prices of berries thus soared by 11.9%, those of vegetables, herbs and mushrooms by 12.5% ​​and olive oil by 12.3%.

In June, the inflation rate thus returned to the zone sought by the Swiss National Bank, between 0% and 2%, which it equates with price stability. The issuing institute has tightened its key rate five times since June 2022, currently at 1.75%, to fight once morest soaring prices.

Increase in rents between 3% and 8%

Further increases are not excluded, especially since inflation is likely to rise from September due to the rise in rents. For this year, the majority of forecasters expect an inflation rate between 2.1% and 2.5% on average. For 2024, it should be between 1.4% and 2.2%.

Guest in La Matinale de la RTS, Arthur Jurus, head of the “world investment” department at the private bank Oddo BHF in Geneva, shares a similar analysis.

“We have rent reviews in Switzerland which are starting to take place and which will continue throughout the second half of the year and which might reach between 3% and 8% for at least half of the tenants. But rents are 15% to the minimum of our daily expenses. There will therefore inevitably be an inflationary impact which might offset the drop in the price of energy.”

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