Swiss inflation rose again last month to reach its highest level in almost three years, driven by the continued increase in imported energy prices amid enduring uncertainty over the outcome of the war in the Middle East.
Annual inflation was 1.5% in October, compared with 1.0% in the prior month, notching its strongest point since December 2023, Switzerland's statistics office said Tuesday.
Oil prices continued to climb last month, pushing up the price of gas at the pump. Inflation is above the midpoint of the Swiss National Bank's 0% to 2% target range for the first time since August 2024.
Prices of imported products increased by 3.7% compared with the same month of last year, up from 2.1% in September, the statistics office said. Energy and fuel costs were 16% higher than in October 2025, up from 12% in September, the data showed.
The Swiss franc rose against the euro after the inflation report. The franc had been declining against the euro since May, until it started to gain again in October.
The SNB had earlier this year been concerned that the franc could appreciate uncontrollably after the outbreak of the war in Iran, should investors use the currency as a safe haven in a time of geopolitical uncertainty. A stronger franc makes imported goods cheaper but means Switzerland's exports are less competitive.
Unlike other central banks that have raised rates in recent months in response to the climb in energy prices, the SNB is expected by investors to keep its key rate on hold at 0% well into next year.
Economists tend to see Switzerland as less exposed to higher energy prices from the war in Iran, given its more diversified energy mix that includes Alpine hydroelectric dams and nuclear power. Inflation in the eurozone is expected at nearly 4% in October in data due on Wednesday.
At its last meeting, the bank said it expected inflation to average at just 1.2% in the fourth quarter of this year, noting that medium-term price pressures had only increased slightly.
However, inflation likely has further to rise, increasing the prospect of the SNB tightening policy, Pantheon Macroeconomics economist Melanie Debono said.
"Our forecasts imply inflation much higher than the SNB expects in early 2027 but they are more or less in line with the SNB's estimates further out. We think the bank will take the opportunity to hike its key policy rate above zero, giving it room for maneuver in the future, should it need to lower rates again," she said in a note to clients.
By contrast, Capital Economics economist Harry Chambers said underlying price pressures remain weak, which should help keep the headline inflation rate within the SNB's target range. Annual core inflation, which strips out more volatile components including energy and fresh food, held at 0.5% in October.
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