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COST OF LIVING

How the cost of living is set to keep increasing in Switzerland

Inflation and the war in Ukraine continue to impact the purchasing power of Swiss households. But how much more will you have to pay for basic services?

Published: 7 June 2023 09:30 CEST
Updated: 11 June 2023 08:35 CEST
How the cost of living is set to keep increasing in Switzerland
Many households will be faced with higher costs. Photo: Pixabay

Even though Switzerland’s inflation fell from 2.6 percent in April to 2.2 percent in May —  the lowest level since February 2022 — the cost of living is continuing to climb.

In fact, for the rest of this year and well into 2024, Swiss consumers will face higher costs for fixed expenses, such as utilities and other services.

In fact, according to the analysis carried out by Watson, the Swiss news platform, an average family with two children may have to spend over 2,600 francs more per year just for essential services.

We’ve compiled an overview of what costs are expected to go up, and by how much:

Rents

With the reference mortgage rate having been raised on June 1st from 1.25 to 1.50 percent, many tenants will see their rents increase by as much as 3 percent. 

What exactly does this mean?

An apartment that now rents for 2,000 francs a month would cost 2,120 francs after the rate increase —  amounting to an additional expenditure of over 1,400 francs a year.

But that’s not all: experts say that reference rates will rise again in 2024, which would mean rents could go up for many by 6 percent in total. 

READ ALSO: Why rents in some parts of Switzerland are now set to increase sharply

Health insurance premiums

While the Federal Office of Public Health (FOPH), which sets the annual health insurance premiums, has not yet announced the increase planned for next year (the figures are released in October), experts already predict another sharp hike.

According to Comparis consumer platform, the average increase should reach 6 percent.

Among the reasons cited by Comparis is the lower money reserve that insurance carriers must keep at a certain level at all times.
However, many health insurers “now lack a financial buffer to cushion current cost fluctuations,” Felix Schneuwly, health insurance expert at Comparis pointed out. 

READ ALSO: Why is Swiss health insurance set to get more expensive?

Electricity
 
You have seen your bills for electricity consumption climb sharply from the beginning of this year — more so in some regions than in others. And these costs will remain steep — and even increase further for some users.

A typical household can now expect to consume 4,500 kWh and pay 1,215 francs for it, which corresponds to 261 francs more compared to 2022, though this amount can vary greatly by region.

Public transportation
 
If you rely on trams and buses to get around, you will have to dig deeper into your pockets to afford this service.

That’s because fares will go up from December 10th, 2023.

Single tickets, as well as day and multi-journey tickets will cost an average of 4.3 percent more.

As an example, Watson cited a round-trip fare between Bern and Zurich, which now costs 102 francs (full fare). From December 10th, it will increase to 106.50. Add to it similar hikes in other fares, and you will get the picture of how much more expensive travel will become.

At the same time, the price of the half-fare travelcard for adults will rise from 185 to 190 francs, and the GA travelcard for second class will go up from the current 3,860 to 4.080 francs.

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For members

MONEY

Is it better for consumers in Switzerland if the Swiss franc is strong or weak?

Although Switzerland’s currency has weakened slightly against the euro in recent weeks, it remains strong. Is it good or bad news for consumers?

Published: 22 April 2024 15:42 CEST
Is it better for consumers in Switzerland if the Swiss franc is strong or weak?

Generally speaking, when a country’s currency is strong — as the franc is right now  against both the euro and dollar — consumers benefit on several fronts.

The main reason is that they will get more bang out of their francs, especially in these situations:

Imported goods

Since the exchange rates between the Swiss and foreign currencies are in franc’s favour, any merchandise that comes from abroad will, in principle, be cheaper.

If you go shopping in a supermarket and find, for instance, that the price of Swiss eggs hasn’t budged (and certainly not downward), you will have more luck with eggs imported from Germany or France.

However, while you may see some savings when purchasing foreign goods, this may not be a huge amount.

The reason, according to Moneyland consumer platform, is that “Swiss importers are not obligated to pass on extra profits earned on exchange rates to customers – and many of them don’t reduce prices at all.” 

Cross-border ‘shopping tourism’

Most products are cheaper — and sometimes by much — in other countries.

Even though inflation rates are higher abroad than they are in Switzerland, as is the Value-Added Tax, the franc’s power means it is still worth your while to buy your groceries in France, Italy, Germany, and other eurozone countries as well.

That, however, doesn’t mean that all products are cheaper abroad – it all depends on the specific goods and services in question.

For example, in general, electronics have lower price tags in Switzerland than in the EU countries.

READ ALSO: The one product that is cheaper in Switzerland 

Foreign vacations

With the franc stronger than the euro and US dollar, you can definitely benefit from travel abroad.

Whether just for a long weekend or full-scale holidays, you will be able to get more out of your money in many foreign countries, at least in terms of accommodations and food, than you would for the same amount of money in Switzerland.

Keep in mind, however, that the strong franc will not compensate for the cost of getting there and back, as the prices for airplane tickets, train travel, and petrol remain high.

All that is good, but is there a flipside as well?

The biggest ‘negative’ of the strong franc is that export-based companies suffer, because the goods they sell are too expensive abroad.

You may argue that this affects economy as a whole rather than individual consumers, and you’d be right — but only up to a point.

That’s because whatever happens in the economy at large will eventually trickle down to, and affect, the population, along with consumer confidence and spending habits.

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