Swiss companies expect inflation to fall

– Swiss companies expect inflation to fall

Inflation in Switzerland is expected to moderate to 1.6% this year. Companies also expect wages to rise by 1.6%.

Published today at 9:23 a.m.

The situation has improved in the manufacturing industry, for financial and insurance services as well as in retail trade.

KEYSTONE/Christian Beutler

Swiss companies surveyed by KOF see their inflationary fears easing. They expect moderate changes in consumer prices over the next twelve months.

Inflation is expected to reach an average of 1.6% this year, according to companies surveyed by the Institute for Economic Research (KOF) at the Swiss Federal Institute of Technology Zurich (ETHZ), which publishes the results on Monday.

In January, expectations for this time horizon fell below 2% for the first time, to 1.9%, while in April 2023, inflation forecasts for the next twelve months rose to 2. 6%.

Considering a broader horizon in five years, companies expect an average value of 1.9%, again below the 2% mark.

Concerning the sales prices of companies, the increase in prices which was evident at the beginning of the year has faded again, notes the KOF.

As for remuneration, companies expect an increase in the average gross salaries they pay of 1.6% over the next twelve months. Wage expectations are lower than in January (1.8%) and are on average at the same level as companies’ inflation expectations.

Boost of private consumption

Overall, business was slightly better in April for the Swiss private economy, according to the KOF survey. The situation improved in the manufacturing industry, for financial and insurance services as well as in retail trade, while it deteriorated slightly in the construction sector.

“In retail trade, this is the third consecutive slight increase in the business performance indicator. Companies in the business services sector also report a gradual improvement,” says KOF.

This improvement, which also affects consumer goods, means that private consumption could give a boost to the Swiss economy, according to the survey.

On the other hand, business deteriorated in the sectors linked to construction and building as well as, more significantly, in wholesale trade and the hotel and catering industry, the situation in the latter sector remaining “generally good”, underlines the ‘institute.