Switzerland's Inflation Rate Rises to 2.1% in December, Marking First Increase in Five Months

Switzerland's annual inflation rate rose to 2.1% in December 2025, up from 1.7% in November and marking the first increase in five months, according to official statistics. This reversal follows a period of sustained price stability and mild deflationary pressures that had persisted since mid-2024. The rise was primarily fueled by higher costs in services, which increased by 2.9% year-on-year, and food prices, which jumped 3.3% over the same period. The core inflation rate, which excludes volatile items like energy and food, also rose to 1.8% from 1.5% in November, signaling broader pricing pressures beyond temporary fluctuations. This suggests that underlying inflationary forces are gaining momentum, particularly in domestic services such as healthcare, transportation, and recreation. The data comes amid growing concerns about wage growth and labor market tightness, which could further feed into price pressures. The Swiss National Bank (SNB), which has maintained its key interest rate at 1.5% since early 2024, may now face renewed pressure to reassess its monetary stance. While inflation remains below the SNB’s 2% target, the consecutive uptick raises questions about whether the central bank will maintain its current policy or consider adjustments in the coming quarters. Markets are closely watching for any signals of a shift in the SNB’s dovish stance. The inflation data has implications beyond monetary policy. Higher consumer prices could affect household purchasing power, particularly for essential goods like food and utilities. Businesses may also face increased input costs, which could influence pricing strategies and profit margins. The developments underscore the delicate balance the SNB must maintain between supporting economic growth and ensuring price stability in a globally interconnected economy.