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Swiss coffee prices drop for the first time ever

The cost of a cup of coffee in Switzerland has dropped for the first time - although not everyone in the country is set to benefit.

Swiss coffee prices drop for the first time ever
Photo: Depositphotos

The cost of living in Switzerland is a major topic on The Local, with everything from rent to international schools among the most expensive anywhere in Europe. 

But it’s not all bad news – with new figures revealing the average price of a cup of coffee is on the decrease across Switzerland. 

Figures produced by Cafetiersuisse – a Swiss industry association for caterers specialising in the field of coffee – have shown the average cost of a cup of coffee in 2019 was CHF4.22 – three cents cheaper than 2018 figures. 

The study compared prices of Switzerland’s favourite coffee – the Café Crème – and found that, somehow, it had gotten cheaper. 

Read: New maps reveal where in Switzerland the rental prices are highest

There is a major caveat however, for Italian and French-speaking Swiss – the price decrease was only measured in German-speaking Switzerland. 

This is the 32nd year Cafetiersuisse has measured coffee prices in Switzerland. The study took into account 650 cafes, bakeries and bistros across the German-speaking part of the country. 

Image: Depositphotos

Not all price cuts are created equal

Coffee is cheaper on average, but it’s not uniform. Competition in urban areas has brought average prices down – while prices in rural parts of Switzerland have remained the same. 

Cafetiersuisse says the major reason for the decrease is the lower cost of coffee beans, which is lower than it has been for the previous 14 years. 

Have your say: Our readers on how to save money raising children in Switzerland

More price cuts on the horizon?

So will the good times continue to roll? Unfortunately for coffee lovers, it’s unlikely we will see a Café Crème under CHF4 anytime soon. 

Aside from raw materials, another major factor in coffee costs is wages in the hospitality sector. With the industry still needing to negotiate the minimum wage for next year, there’s a chance prices could go up again. 

Read: What you need to know about the minimum wage in Switzerland 

 

 

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COST OF LIVING

EXPLAINED: What the steep rise in Swiss interest rates could mean for you

The Swiss National Bank (SNB) raised the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

EXPLAINED: What the steep rise in Swiss interest rates could mean for you

As announced by Switzerland’s central bank on Thursday, the rate change applies from Friday, September 23rd.

“The bank’s aim is to counter the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected”, according to SNB.

The SNB has not said how long the current rate will be in place, but noted that “it cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term”.

READ MORE: Swiss central bank announces big rate hike in inflation fight

Inflation rate in Switzerland currently stands at 3.5 percent. While it is much lower than in the eurozone, where it exceeds 9.1 percent, it is still higher than its usual rate of below 1 percent.

Why has the SNB raised the interest rate for the first time since 2015?

For the same reason that other central banks have done so, including the European Central Bank and the Federal Reserve in the US: price stability

In general, central banks see increasing interest rates as a response to rising inflation: higher rates help reduce the overall level of demand and, subsequently, also the upward pressure on prices.

Whether this strategy will work is another matter.

The SNB rate hikes will “have a fundamentally dampening effect on inflation”, Felix Oeschger, analyst at Moneyland price comparison platform, told The Local.

“However, it is far from clear whether these alone will be enough to curb inflation”, he added.

One for the reasons for this uncertainty, Oeschger said, is that “the energy crisis and the high prices of some agricultural commodities, such as wheat, are a result of the Ukraine war. These prices are more difficult to influence with key interest rate increases”.

In its inflation forecast, the SNB predicted the inflation will drop to 2.4 percent in 2023.

But “considering that the SNB has continuously revised its inflation forecasts upward since December 2021, it is quite conceivable that inflation in Switzerland will continue to rise or at least remain high”, Oeschger pointed out.

READ MORE: EXPLAINED: The groups most affected by inflation in Switzerland

Will the Swiss consumers benefit (or not) from the higher interest rates?

It depends on what you are looking to buy.

If you are planning to buy big-ticket items that are usually purchased with credit — like homes — then you may have to dig deeper into your pockets.

If you already have a fixed-rate mortgage, then you are safe from rate increases for the term of your mortgage.

But for new buyers or those with variable-rate mortagages, things may be more problematic.

“It is not excluded that mortgage interest rates will reach 3 to 4 percent next year”, from the current 2.6 to 3.1 percent, according to Donato Scognamiglio, director of real estate platform Iazi.

What about rents?

Tenants may not be better off than homeowners.

Many have already received notices of higher rents to compensate for increased costs of energy.

Now another charge could be added as well, though probably not immediately.

“Rents will go up, but only when the reference interest rate itself is raised”, Scognamiglio said.

The benchmark interest rate is the average of all mortgage interest rates. If the reference rate increases by 0.25%, tenants will have to pay 3 percent more rent. “I expect this to happen next year”, he said.

But it is not all bad news; higher interest rates will yield some benefits as well.

For instance, if you have certain types of investments, you may see more money coming in.

“I expect yields on fixed-income financial products such as bonds to continue to rise”,  Oeschger said.

“In the case of medium-term notes issued by Swiss banks, we have already seen significant increases since the beginning of the year”, he added.

As for savings accounts, however, “the banks have so far been very hesitant to raise interest rates, but if monetary policy tightens further, we can expect interest rates to rise slightly here as well”.

Generally speaking, what will become cheaper and more expensive for consumers?

The bad news here is that everything that has to do with energy, even indirectly, will become more expensive.

This includes “heating, transport costs, electricity and also food”, another Moneyland expert, Ralf Beyeler told The Local.

READ MORE: Pasta up by 13 percent: How food and energy prices in Switzerland are rising

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