Inflation
How rising prices slowly reduce what your money can buy, why cash loses value over time, and why a return only counts once inflation is taken out.
Key idea
Inflation doesn't take francs out of your account, it makes each franc buy less. Swiss prices rose 0.6% a year over the 30 years to 2025, so CHF 10,000 kept as cash lost 16.3% of its buying power. At 2% a year, the Swiss National Bank's upper limit for price stability, it would have lost 44.8%.
What it is
Inflation is the general rise in the prices of goods and services over time. When prices rise, each franc buys a little less. Your account balance stays the same, but what it can pay for shrinks. In Switzerland, inflation is measured with the consumer price index, which tracks the prices of a typical basket of household spending.
Swiss inflation since 1995
Swiss prices have risen slowly, though not every year. By the Federal Statistical Office's index, consumer prices rose 7.6% over the 10 years to 2025, 10.4% over 20 years and 19.5% over 30 years: 0.7%, 0.5% and 0.6% a year, compounded. CHF 10,000 kept as cash from 1995 to 2025 lost 16.3% of its buying power: in 2025 it bought what CHF 8,368 had bought in 1995.
Inflation doesn't move in a straight line. Prices fell 0.7% in 2020 and rose 0.6% in 2021, then 2.8% in 2022. In August 2022 they were 3.5% higher than a year earlier, the highest rate since 1993. In August 2026, the rate was 0.8%.
What CHF 10,000 buys later
The Swiss National Bank's upper limit for price stability is 2% a year. Here's what CHF 10,000 kept as cash can buy, in today's prices, as the years pass at 2% inflation:
- Today: CHF 10,000.00
- After 10 years: CHF 8,203.48
- After 20 years: CHF 6,729.71
- After 30 years: CHF 5,520.71
After 10 years the CHF 10,000 buys what CHF 8,203.48 buys today, after 20 years what CHF 6,729.71 buys, and after 30 years what CHF 5,520.71 buys. Here's the same at three steady inflation rates:
| Rate | After 10 Years | After 20 Years | After 30 Years |
|---|---|---|---|
| 1% | 9,052.87 | 8,195.44 | 7,419.23 |
| 2% | 8,203.48 | 6,729.71 | 5,520.71 |
| 3% | 7,440.94 | 5,536.76 | 4,119.87 |
At 2% a year, prices after 30 years are 1.81 times what they are today, so the CHF 10,000 buys only what CHF 5,520.71 buys now. That's 44.8% of its purchasing power gone, without a single franc leaving the account.
What it means for your money
Three consequences for anyone saving:
Cash loses value
Money in a drawer or an account without interest keeps its number but buys less every year that prices rise.
Real vs nominal returns
The nominal return is what your statement shows, the real return what's left after inflation. 5% with 2% inflation is 2.94% real.
Why investing matters
To grow what your savings can buy, they have to earn more than inflation. Over decades, that usually means investing, not cash.
Savings don't keep up either: in August 2026 the savings rates Swiss banks published averaged 0.07%, according to the Swiss National Bank, while prices rose 0.8%. Cash still has its place, as an emergency fund, but money you won't need for many years loses buying power there.
The honest caveat
Low inflation is easy to ignore, because a year at 1% or 2% hardly shows. But it compounds just like interest does. Over 30 years, 1% a year takes away 25.8% of what your money buys, and 2% a year takes away 44.8%. Rates that look harmless in any single year add up to a large loss over a working life.
The official rate is also an average. Your own inflation depends on what you spend your money on, and rent, insurance or childcare can rise faster or slower than the index. Health insurance premiums aren't in the index at all, only the medical care they pay for.
Swiss note
The Swiss National Bank is responsible for keeping prices stable, and it steers them mainly through its policy interest rate. It defines price stability as a rise in the consumer price index of less than 2% a year. A lasting fall in prices, deflation, counts as a breach too. Even at 2% a year, prices double in 35 years; the rule of 72 says 36. Check how much of your savings sits in cash beyond your emergency fund.
Key takeaways
- —Inflation reduces what each franc buys, even when the number in your account stays the same.
- —Small rates add up: at 2% a year, CHF 10,000 loses 44.8% of its purchasing power in 30 years.
- —What counts is the real return: the return after inflation.
- —Cash is stable in francs, not in what it buys. Over long horizons, investing gives savings a chance to outgrow inflation.