Swiss inflation doubles in August

Swiss inflation doubled in August as sharply higher fuel prices pushed consumer prices 0.8% above their level a year earlier. The rate stood at 0.4% in July, while economists had expected 0.5%.

The main driver was a 25% increase in petroleum product prices. The article links the jump to the war in Iran and the resulting blockade of the Strait of Hormuz, which has disrupted global oil and gas supplies.

The data has revived speculation about the timing of the Swiss National Bank’s next rate increase. The SNB’s inflation target range runs from zero to 2%, and it will decide on its policy rate, currently zero, on Sept. 24. Financial markets had previously expected no increase before March 2027.

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Although the SNB is not in acute difficulty given that inflation is still relatively low in absolute terms, price risks in Switzerland have also shifted upward. A rate increase in December cannot be completely ruled out.

Some analysts now see an earlier move as more likely. VP Bank chief economist Thomas Gitzel said inflation remained comparatively low in absolute terms, but price risks had shifted upward in Switzerland. He said a December rate increase could not be ruled out. EFG Bank economist GianLuigi Mandruzzato pointed to the possibility of tighter monetary policy at the end of 2026 or in early 2027, citing economic growth above potential and rising pressure from imported goods.

The SNB declined to comment on the inflation figures. Separately, Switzerland’s economy grew 1.5% in the second quarter from the previous quarter, its strongest growth since the third quarter of 2021. The chemicals and pharmaceuticals sector led the expansion, rising 10.5%.

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The risk of tighter monetary policy is present toward the end of 2026 or at the beginning of 2027.