Big-Picture Snapshot

Drivers this month

The SECO Consumer Climate index rebounded to -28 in August from -39 in May, marking an 11-point improvement but remaining firmly negative. This compares to a trough of -21 in February 2025 and reflects ongoing consumer caution amid high inflation and elevated interest rates[1]. The recent gains are primarily driven by slightly improved sentiment on income expectations and purchases of durable goods. However, concerns on employment and general economic outlook remain subdued.

Policy pulse

The Swiss National Bank (SNB) has maintained a cautious stance amid inflation running above its 2% target but has tempered rate hikes as headline inflation shows signs of peaking. The consumer climate readings align with a moderately restrictive monetary policy environment, balancing inflation control with a fragile demand backdrop. The index remains below the long-term average of -10, indicating consumers have not yet regained full confidence for robust spending growth.

Market lens

Financial markets reacted cautiously post-release. The 2-year Swiss government yield dipped slightly by 3 basis points, reflecting tempered expectations for aggressive SNB tightening. CHF currency exhibited mild appreciation (0.40%) against the euro in the first hour, a typical safety-seeking move amid mixed sentiment. Breakeven inflation-linked swaps edged down by 2 bps, suggesting stabilized but still subdued inflation expectations[2].

Foundational Indicators

Core economic signals

The consumer climate index traditionally correlates with Swiss retail sales and private consumption growth. A level of -28 historically signals below-trend consumption expansion of around 1.00-1.50% YoY, down from a 2.10% pace in early 2024[3]. Inflation currently hovers near 3.50% YoY—higher than SNB’s 2% target but below peaks above 4%. Unemployment remains steady at 2.20%, suggesting a resilient labor market supporting household incomes.

Fiscal policy & budget stance

The Swiss government continues a cautious fiscal approach with modest stimulus elements in 2025, focusing on targeted support for green energy and innovation sectors. The general budget balance is modestly negative at -1.20% of GDP, reflecting balanced priorities between stimulus and fiscal prudence. This restrained fiscal backdrop limits direct boosts to consumer confidence, placing the onus on monetary and external factors.

External & geopolitical factors

Switzerland faces mixed external conditions. Global supply chain disruptions ease gradually, but geopolitical risks—especially tensions in Eastern Europe and trade frictions in Asia—persist, weighing on export-driven confidence. Currency stability and safe-haven flows partially shield consumers from shocks, but uncertainty around energy prices and potential trade restrictions contribute to cautious sentiment.

Chart Dynamics

Historical comparisons

The current reading of -28 places the SECO Consumer Climate index well below its 10-year mean of approximately -10. Notably, in 2022 during global inflation surges, the index plunged to -45—the lowest in a decade. The August 2025 figure thus reflects improvement from stressed pandemic and inflation-era lows but remains far from optimism seen in 2018-2019 (+5 to +10 range).

Twelve-month trajectory

Over the past year, the index fluctuated notably: from -21 in Feb 2025 to -39 in May, now back to -28. This volatility mirrors sharp policy shifts and external shocks, including energy price volatility and SNB rate hikes from 1.00% to 3.00% over 12 months. The pattern suggests consumers adjust quickly to macro shifts but remain anchored by inflation concerns.

Volatility & composition

Disaggregated data indicate household purchase expectations contributed 0.15 points to the monthly gain, while income expectations added 0.08 points. Conversely, unemployment fears (-0.12 points) and inflation concerns (-0.10 points) limited upsides. These sectoral swings highlight a mixed confidence picture balancing relief on some fronts with persistent vulnerabilities.

Forward Outlook

Bullish scenario (25% probability)

Inflation normalizes below 2.50% by Q1 2026, coupled with SNB rate stabilization. Improved global trade and easing geopolitical tensions boost exports, lifting consumer confidence above -10 points. Private consumption growth reaches 2.50+% supported by real income gains and stable employment.

Base scenario (50% probability)

Gradual inflation decline to around 3%, modest SNB rate increases, and steady labor markets keep the indicator near current -25 to -30 range through 2025. Consumption growth ranges 1.00-1.50%, constrained but with no sharp contractions.

Bearish scenario (25% probability)

Resurgence of inflation above 4%, aggressive SNB tightening, or intensified geopolitical shocks depress confidence below -40. Consumer spending contracts, risking technical recession in late 2025 or early 2026.

Risks & balancing factors

Upside risks include stronger wage growth and renewed investment in tech sectors, while downside remains from persistent inflation surprises, credit tightening, or external shocks. Policymakers’ cautious stance aims to balance these forces but uncertainty is elevated.

Closing Thoughts

The August SECO Consumer Climate reading paints a nuanced picture of Switzerland’s consumer mood. The rebound to -28 signals tentative relief from earlier pessimism but confirms cautious behavior amid ongoing macroeconomic headwinds. Historical context shows this is a typical post-shock level but below what fuels sustainable consumption-led growth. Monetary policy remains tight yet measured, and fiscal direction cautious. External uncertainty, especially geopolitical, looms large. Moving forward, monitoring inflation trajectories and income expectations will be critical to forecasting consumer resilience.

The SECO Consumer Climate remains a vital early indicator embedded in broader macroeconomic trends and financial conditions. Stakeholders should prepare for modest growth tempered by lingering downside risks.