publication
2025-05-05 12:38
April 2025 brought a rare phenomenon. Price inflation in a large economy was zero. Round zero both on annual and monthly terms. Finally, the Swiss (though probably for a short time) achieved excellent “price stability”.
In April, CPI inflation in Switzerland decreased to 0.0 percent. to 0.3 percent In noted in March and February – the Federal Statistical Office informed. Compared to the previous month, the price index remained exactly at the same level (0.0% MDM).
Also in March 2025 a monthly change in the Swiss CPI was zero. In February, however, the price index of consumer goods in Switzerland increased by 0.6% MDM after declines recorded over the previous five months in a row. Generally, after May 2024, the Swiss CPI recorded only one upward month (already mentioned February '25).
As a result of the prices of a wide basket of consumer goods (i.e. CPI) in the Helweck economy, they behave extremely stable. They neither grow nor fall. In this way, the Swiss achieved a dictionary definition of price stability. This is an extremely rare situation in the modern world, where in the regime of partial reserves and fiduci money prices are almost constantly rising.
But not in Switzerland, where the periods of even several months of price deflation are not rare. For the last time, the Helvets recorded such a deflating episode in 2020-21. Earlier, negative annual Swiss CPI dynamics occurred in 2014-16 and 2011-13 and in 2009.
What's more, such a situation in this Alpine country does not arouse panic that would take place in such a situation, e.g. in the euro area or the United States. There, central banks aimed at maintaining inflation of 2% within the medium time. Therefore, the monetary authorities there seek to maintain permanent inflation and price increase in the economy. Meanwhile, the Swiss National Bank sets itself the task of maintaining an annual price increase not higher than 2%. So it is a 0-2% range and positive readings similar to zero still fit for the purpose.
It is worth recalling one more result here. Swiss statistics publish not only the monthly and annual dynamics index of consumer goods prices (CPI), but also its change in relation to the state of December 2020. So, roughly speaking, relative to the start of the starting-war inflationary wave. Since then, the Swiss CPI has only risen (or up to) by 7.5%. For comparison, in Poland an analogous price measure went up by over 40%.
Therefore, SNB in recent quarters has been able to afford decisive reduction of interest rates. At the end of March, the Helvets carried out the fifth -row monetary policy rate, bringing it to the area of zero. Before that, SNB reduced interest rates at 25 PB. In September and June and in March 2024, when it surprised everyone and as the first in this cycle the central bank of the developed country decided to reduce interest rates.
