The case

According to an article by Daniel Zulauf in CH Media on 10 June 2026, “Switzerland owes its strong franc to low inflation”. How do we know whether is this really the case?

Source: CH-Medien, economiesuisse

The commentary

For quite some time, Switzerland has sported one of the lowest inflation rates among highly developed economies, one key reason being the strength of the Swiss franc. As a widely open economy that relies heavily on imports of goods, raw materials as well as energy, Switzerland has directly benefitted from a strong currency. By reducing the cost of imports, the franc has buffered the impact of rising global prices and limited the transmission of inflation from abroad.

While many countries have experienced surges of consumer prices in the wake of both the pandemic and the energy shocks of recent years, inflation in Switzerland has remained comparatively subdued as the strong franc has served as an effective bumper that has helped to preserve the purchasing power of households and businesses alike.

The advantages are evident for consumers: Imported goods, commodities and international travel have become more affordable. Exporters, on the other hand, have been faced with greater competitive pressure, as Swiss products have become more expensive in foreign markets.

It must be pointed out though that from a macroeconomic perspective, the benefits largely outweigh the drawbacks. The strength of the franc has become an important anchor of price stability, so it is more accurate to state that Switzerland’s low inflation is, in part, a consequence of its strong currency rather than the other way around as pointed out by Zulauf.

It goes to say that the exchange rate is not the only possible explanation. Switzerland also has also benefitted from several structural strengths: A relatively energy-efficient economy, a lower share of household spending devoted to energy, regulated electricity prices and infrastructure prices, vigorous competition in retail markets and consistently high productivity growth. All these factors have helped to contain inflationary pressures.