Instructions for use

• The FSO measures the general change in prices at different levels of the economy – consumption, production, imports, exports, construction and property (investment) – and makes this information available to users. 
• The FSO formulates general recommendations on applying the index results and can provide advice and support in this regard. 
• However, the FSO assumes no responsibility regarding the application of the results.

• It is for contracting partners to determine how they use the FSO results. This also applies to the choice of index and the indexation approach defined. 
• The contractual framework is the Swiss Code of Obligations (CO).

Contracts often link amounts to inflation by means of indexation over a certain period of time. This is intended to prevent the agreed amount from being devalued by any inflation. This is particularly important for wages, pensions, alimony or long-term contracts. The agreed amount is indexed to a constant purchasing power.

Ordinary cross-multiplication is used to calculate an index-linked amount at any given time: 

indexed amount = initial amount x final index value / initial index value 

Recommendations 

• The final index value and the initial index value must always be used on the same index base! 
• For indexation with the global index, the FSO offers indexation tables and the CPI Inflation Calculator.

In addition to the appropriate description of the index object and the designated index amount in CHF, it is advisable to disclose the following parameters: 

• Index series to be used (e.g. CPI, Global index); 
• Initial index value (index level in points) at the time the contract was agreed and the index base (= 100 points) of the index series used; 
• Indexation mechanism (frequency and timing of adjustments); 
• Specific arrangements (e.g. conditional indexation with threshold value).

Price statistics have an extremely diverse range of applications and are not geared to a particular sector. The FSO provides price indices for various consumer sectors and levels of consumption, with the choice of index dependent on what the index results are to be used for. 

There should be a minimum material coherence between the object of the amount to be indexed and the index used: 

• Consumer Price Index for maintaining general purchasing power (alimony payments, pensions, etc.); 
• Producer Price Index for taking the future evolution of costs into account for a production order. 
• Some economic activities have widely recognised sector recommendations. For example, the construction sector often uses the indices published in the Material Price Indices KBOB table as reference indicators.

Indicator – Measurement object

• Swiss Consumer Price Index (CPI) – Change in private consumption prices
• Price Index of Total Supply – Change in prices of all goods produced in or imported into Switzerland
• Producer Price Index (PPI) – Change in prices of all goods produced in Switzerland, incl. exports
• Import Price Index (IPI) – Change in prices of all goods imported into Switzerland
• Price Index of Total Supply – Domestic Supply – Change in prices of all goods marketed in Switzerland
• Material Price Indices (KBOB) – Change in prices of selected products for the construction industry
• Construction Price Index (CoPI) – Change in prices in building construction and civil engineering in Switzerland

The mortgage reference rate, published on the website of the Federal Housing Office (FHO) at https://www.bwo.admin.ch, is normally used to adjust housing rents. 

The cumulative inflation since the last adjustment (according to the CPI) and the trend in general maintenance costs can also be partially passed on. 

Housing rents can also be tied to the CPI, although index-linked rents are more common for commercial properties and are governed by special rules. 

Legal basis: 

• Federal Act of 30 March 1911 on the Amendment of the Swiss Civil Code (Part Five: The Code of Obligations, Title Eight: The Lease) 
• Ordinance of 9 May 1990 on the Rental and Leasing of Residential and Business Premises (in German, French or Italian)

The aim of price statistics is to measure the general change in prices. This is shown by the index performance at the global level. Countless detailed results are also published in addition to the respective global indices. By definition, the statistical validity decreases as the level of detail increases. Detailed results are primarily used for analysis purposes and to categorise the general change in prices. 

Recommendations 

• In principle, the FSO recommends using the general change in prices at the global level for indexation purposes. 
• If a detailed series is used for indexation, it must also be borne in mind that the contents and structures of the baskets of goods and services are updated on an ongoing basis and the series defined in the contract may no longer be published in the future. It is advisable to set out in the contract the procedure for replacing an index series that is no longer available (e.g. by switching to the next-higher aggregate).

The FSO revises its price indices every five years and ties the results from this point onwards to a new index base (= 100 points). 

Index series at the global level continue to be calculated on the previous bases and the results published. 

However, the detailed series of the new basket of goods and services are published exclusively on the new base from the time of the revision. Existing index series are recalculated on the new base, including past results. 

It is important for indexation purposes that only index values on the same base are used. If index values on different bases are used, this will necessarily result in a miscalculation. 

Recommendations 

• The most up-to-date index base should be chosen when concluding a contract, and a corresponding note entered in the text (e.g. relevant level is CPI in October 2023: 106.4 points (base December 2020 = 100 points)). 
• To avoid rounding differences, once the base has been chosen it should be retained going forward and the index amount always calculated relative to the starting point of the indexation, e.g. using the FSO Inflation Calculator. 
• If a switch to a new base is nevertheless required, the index values fixed when the contract was concluded must also be recalculated on the new base.

When and how often an index amount should be reviewed and adjusted is driven by the objectives of the users. Indexation can take place on an ongoing basis, periodically or at a given point in time. 

Recommendations 

• The timing of indexation should be laid down in the contract (see indexation mechanism). 
• To avoid seasonal effects, the same point in time (calendar month or annual average) should always be used. 
• It is worth defining the relevant index level according to the actual time of adjustment. Please note that the results defined for indexation are not available until the measurement period has ended. If an index amount is to be adjusted with effect from 1 January, for example, the November index is therefore the most recent. 

Example: 

The index amount is to be indexed annually in December using the November index and the adjusted amount paid from January.

Inflation adjustments are normally tied to a specific point in time. The index amounts are adjusted on a systematic and regular basis or at the time of the previously defined transaction. However, there are also cases where the adjustment is linked to a threshold value for the index. The most suitable approach depends on the specific objective of the indexation in each individual case. 

The most common indexation mechanisms include: 

1. Ongoing and systematic inflation adjustment 
2. Indexation of a forward contract 
3. Inflation hedging with threshold value

If an amount is to be systematically tied to inflation, it is sufficient to define the timing of the indexation, in other words when the amount is to be adjusted to reflect the current price level. 

Recommendations 

• Define the timing of the indexation and the relevant index month. 
• Indexation should ideally always take place in the same calendar month in order to avoid seasonal effects. 
• It is also advisable to specify when the adjusted amount will first be due. 

Example: 

The index amount will be indexed annually in December in line with the index level of the CPI, Global index (base December 2020 = 100 points). The adjusted amount will be due to be paid for the first time each January.

It can make sense to include an indexation clause in forward contracts. 

Recommendations 

• To protect a purchase amount agreed at the time of ordering against cumulative inflation arising between that point and the time of payment, it is sufficient to set out the procedure to be followed when the defined transaction takes place (e.g. delivery). 

Example: 

The agreed amount will be adjusted in line with the most up-to-date index level at the time of delivery and will be due by the agreed payment deadline.

In the case of recurring indexations over the long term, indexation can be made dependent on a threshold value and only takes place if a predefined limit value is reached. This approach is frequently used for smaller amounts in order to minimise the amount of adjustment work required.

Recommendations 

• The threshold value should be defined on a nominal basis, in other words as a difference in points compared with the last adjustment. This is because percentage values are relative to the mobile initial level and would not allow for a linear adjustment. 
• Once again, it is worth clearly stipulating when the index level is to be checked, the relevant limit value and when the indexed amount will be due. 

Example: 

The index amount will be adjusted as soon as the index level is two points above the index level of the last adjustment. The check will be carried out annually in December using the current index level from November. The adjusted amount will be due to be paid for the first time each January.

Scenario: In their separation agreement concluded in March 2022, Ms and Mr Müller agree an alimony payment to be paid until their daughter reaches the age of majority in 2029. The amount of CHF 2000 is to be indexed annually with effect from January using the November level of the Swiss Consumer Price Index. The last indexation will take place with effect from January 2029 to cover the remaining months until their daughter’s birthday. 

Reference values

• Amount: CHF 2000.00 
• Start date: February 2022 
• Index: Swiss Consumer Price Index, Global index monthly values (base: December 2020 = 100 points) 
• Index level (start date): 102.4 points (February 2022) 
• Indexation mechanism: annually with effect from January using the index level in November of the previous year (first time in November 2022, last time in November 2028)

Calculation example 

• Indexed amount from: January 2023 
• Index level (November): 104.6 points (November 2022) 
• Formula: amount in January 2023 = (amount in February 2022 x index November 2022) / index February 2022 
• In figures: (CHF 2000.00 x 104.6 points) / 102.4 points = CHF 2043.00

URL for the details page of the latest version (download is triggered manually): 
https://www.bfs.admin.ch/asset/en/cc-e-05.02.08 

URL for download (downloads the Excel table directly to the browser's default download folder): 
https://dam-api.bfs.admin.ch/hub/api/dam/assets/orderNr:cc-e-05.02.08/master 

The current index status on all bases can also be viewed in our online application: 
https://lik-app.bfs.admin.ch/en/lik/werte