Unexpected decline in inflation in Switzerland - What is behind the surprising development? Expert analysis

Unexpected decline in inflation in Switzerland - What is behind the surprising development? Expert analysis

According to a report from www.tagesanzeiger.ch, inflation in Switzerland has surprisingly fallen. Many experts had expected inflation to rise due to higher rents, but official figures show prices rose just 1.4 percent in November compared to the same month last year. This is a decrease of 0.3 percentage points compared to the previous month.

The lower prices in the hotel industry, for package holidays abroad, fuel, heating oil and fruit vegetables have helped to compensate for the increase in prices. However, it is also clear that rent increases are already having an impact on inflation, as the reference interest rate has been increased, which allows landlords to increase rents under certain conditions.

The question that many experts are now asking is how much inflation will rise again. Factors such as the weak economy and planned price increases such as the VAT increase and the renewed increase in the reference interest rate are expected to contribute to inflation. A rough estimate suggests that these effects together could contribute about half a percentage point to inflation.

For the Swiss National Bank, this means that inflation is expected to remain in the region of 2.1 to 2.2 percent for much of 2024. Although this is outside the target range of 0 to 2 percent, which the SNB equates with price stability, there is no immediate reason to tighten monetary policy.

However, it should be noted that price increases such as reference interest rates in housing, VAT and electricity tariffs are not variables that depend on the economic situation, but are administered prices. Such price increases lead to a one-off effect that disappears from the statistics after twelve months.

From a financial perspective, this development suggests that inflation in Switzerland will rise again and that this, combined with other economic factors, could potentially have an impact on the market and the financial sector. The planned increase in VAT and the renewed increase in the reference interest rate could further drive inflation and influence various investment strategies. However, more detailed calculations and analysis would need to be carried out to determine the exact impact on the market.

It is crucial to closely monitor these developments and monitor the impact on the financial industry in order to make adjustments to existing strategies if necessary.