The December 2025 Consumer Price Index (CPI) for Switzerland came in at 0.00% month-over-month (MoM), unchanged from November’s revised 0.00% after a sharp -0.30% drop in October. Year-over-year (YoY) inflation remains subdued, hovering near 0.50%, well below the SNB’s 2% target. This marks a significant deceleration from the steady 0.20% monthly gains recorded from August through October 2025, as per the Sigmanomics database.

Drivers this month

• Energy prices stabilized, contributing 0.00 percentage points (pp) to CPI growth, reversing prior declines.
• Shelter costs remained flat, with no upward pressure on inflation.
• Food prices showed marginal increases, offset by lower transportation costs.

Policy pulse

The SNB’s inflation target of 2% remains distant, with core inflation steady near 0.50%. The zero CPI reading suggests limited immediate pressure for rate hikes, reinforcing the SNB’s cautious stance amid global uncertainties.

Market lens

Immediate reaction: The Swiss franc (CHF) showed minimal movement against the euro (EURCHF), while 2-year Swiss government bond yields edged down by 3 basis points, reflecting subdued inflation expectations.

Switzerland’s core macroeconomic indicators paint a mixed picture. GDP growth for Q3 2025 was a modest 0.30% QoQ, consistent with a slow-growth environment. Unemployment remains low at 2.10%, but wage growth is muted at 1.20% YoY, limiting upward pressure on consumer prices. The fiscal deficit narrowed slightly to 0.80% of GDP, reflecting prudent government spending and stable tax revenues.

Monetary policy & financial conditions

The SNB has maintained its policy rate at -0.75% since mid-2024, prioritizing financial stability over aggressive inflation targeting. Liquidity conditions remain ample, with the Swiss franc’s safe-haven status supporting capital inflows despite global volatility.

Fiscal policy & government budget

Switzerland’s fiscal policy remains conservative, with the government emphasizing balanced budgets and targeted infrastructure investments. The 2025 budget projects a slight surplus, supporting long-term fiscal sustainability without stimulating inflation.

Drivers this month

• Energy prices: 0.00 pp contribution, stabilizing after prior declines.
• Shelter: 0.00 pp, reflecting steady housing costs.
• Food: 0.02 pp, slight upward pressure.
• Transportation: -0.02 pp, offsetting food gains.

Policy pulse

The CPI’s flat reading reinforces the SNB’s cautious approach, with inflation well below target and no immediate signs of overheating. This supports expectations for a steady policy rate through early 2026.

Market lens

Immediate reaction: Swiss government bond yields declined slightly, reflecting market confidence in subdued inflation. The CHF remained stable versus EUR and USD, indicating balanced risk sentiment.

Looking ahead, Switzerland’s inflation trajectory faces several potential scenarios. The base case (60% probability) assumes continued low inflation around 0.50% YoY, with stable energy prices and moderate wage growth. The bullish scenario (20%) envisions a gradual pickup to 1.00% YoY, driven by stronger domestic demand and rising global commodity prices. The bearish scenario (20%) projects renewed deflationary pressures below 0%, triggered by external shocks or a sharp franc appreciation.

External shocks & geopolitical risks

Heightened geopolitical tensions in Europe and supply chain disruptions could weigh on Swiss exports and inflation. Conversely, easing tensions and a rebound in global trade may support moderate inflation gains.

Structural & long-run trends

Demographic shifts, technological advances, and persistent productivity gains continue to exert downward pressure on inflation. These factors suggest that Switzerland’s inflation will likely remain below the SNB’s 2% target for the foreseeable future.

Switzerland’s December CPI print of 0.00% MoM signals a pause in recent deflationary trends, but inflation remains subdued overall. The SNB’s cautious monetary stance aligns with this data, as the central bank balances low inflation against global uncertainties. Fiscal prudence and stable financial markets support a steady macro environment, though external risks warrant close monitoring. Investors should watch for shifts in energy prices, wage dynamics, and geopolitical developments that could alter the inflation outlook in 2026.

Key Markets Likely to React to CPI

The Swiss CPI influences several key markets, notably the Swiss franc (CHF), Swiss government bonds, and export-driven equities. The EURCHF currency pair often reacts to inflation surprises, reflecting cross-border trade sensitivity. The SMI index, Switzerland’s benchmark equity market, tracks inflation-driven shifts in corporate earnings and consumer demand. On the fixed income side, SWISS10Y yields respond to inflation expectations and SNB policy signals. Additionally, the BTCUSD pair occasionally reflects risk sentiment shifts tied to macroeconomic data. Lastly, the USDCHF pair is sensitive to relative monetary policy and inflation differentials between the US and Switzerland.

FAQ

What does the December 2025 CPI reading indicate for Switzerland?

The 0.00% MoM CPI reading signals stable prices with no inflationary pressure, reflecting subdued demand and steady energy costs.

How does Switzerland’s CPI compare historically?

Compared to the steady 0.20% monthly gains earlier in 2025 and the -0.30% dip in November, December’s zero reading marks a pause in disinflation.

What are the implications for the Swiss National Bank?

The SNB is likely to maintain its accommodative stance, as inflation remains well below the 2% target, reducing pressure for rate hikes.

Key takeaway: Switzerland’s CPI stabilization at zero in December signals persistent low inflation, supporting a cautious SNB and steady financial markets amid global uncertainties.