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COST OF LIVING

Cost of living: Four challenges Swiss residents are facing and how to deal with them

Even though Switzerland is weathering the economic downturn better than other nations, people are still having to deal with an increasing number of problems. We look at what they are and give tips on how to save money.

Published: 17 July 2023 15:39 CEST
Cost of living: Four challenges Swiss residents are facing and how to deal with them
Consumer prices are a major concern in Switzerland. Photo by Markus Winkler on Unsplash

Its European neighbours probably think Switzerland doesn’t have a care in the world — its inflation rate is much lower than elsewhere and its economy is stronger than most.

All that is true, and looking from the outside in, it does appear that the Swiss are faring relatively well in comparison with their EU counterparts.

However, this idealised perception of Switzerland is deceptive, as many residents are facing hardships that are not likely to be resolved in the immediate future.

Soaring rents

After the Federal Housing Administration raised reference rates to 1.50 percent from June 3rd, another hike — this time to 1.75 percent — by the Swiss National Bank (SNB), also went into effect.

These increases are putting further pressure on the tenants already dealing will high costs amid a very tight housing market, especially in large cities.

READ ALSO: Tenants in Switzerland hit by another blow with rent prices to rise further

TIP: So, what can you do if you have received a notice of your rent going up?

While the situation may seem hopeless, there are some actions you can take.

First, you can check whether the increase is higher than it should be.

You can do this using special online calculators that Switzerland’s tenant association make available.

They ask you to insert relevant information relating to your rental contract, as well as other details, and you will then see if your current rent, as well as any impending hikes, are justified.

The calculator can be found here for Swiss German regions and for French-speaking areas.  

In the mainly Italian-speaking Ticino, the local chapter can inform you how to check your rent. 

If it turns out your hike is excessive, you have the right to challenge it by reporting it to the BWO.

Increasing rents are a major headache in Switzerland. Photo: Pixabay
 

Higher health insurance premiums

Swiss healthcare premiums soared by 6.6 percent on average in 2023, putting an added financial burden on many families.

Unfortunately, these costs are expected to go up again in 2024.

In fact, not only are they set to increase again, but they may also be significantly more expensive next year: the latest figures f already show a 7.5-increase in costs per insured person.

TIP: Health insurance premiums take a huge bite out of household budgets, so what can you do to lower the bill?

Final premiums will be released by October 31st, and you will then have until November 30th to find a cheaper plan that allows you to cut at least some of the cost.

If you do decide to part ways with your current carrier, make sure you have another one in its place before making the switch. Health insurance is compulsory in Switzerland for every resident, whether Swiss or foreign, so you can’t be without coverage even for a short period of time.

Once you find a less expensive option, you can cancel your current plan.

The insurance carrier must receive your termination letter, sent by registered mail, no later than November 30th.

You must attach proof that you have taken out a new insurance policy.

Any outstanding monthly premiums must be paid before you can make the switch

READ ALSO: How to save money by changing your Swiss health policy

Rising cost of electricity

In addition to rents and health insurance, another fixed household cost — electricity — will be hit by price increases as well, even though they already increased sharply in 2023

The expected hike will be around 12 percent, the Association of Swiss Electric Companies announced in June.

This means that a typical household of four people will pay 30 cents per kilowatt hour for its electricity, against 27.2 cents this year.

TIP: While you can’t do anything about the price increases you can lower your bill by using electricity sparingly.

For instance:

  • Use heat in moderation, setting the temperature according to the size of the room and how often it is being used. Unoccupied rooms should not be heated at all
  • Turn off the light when leaving a room (this advice is logical and reasonable, and yet many people neglect to do so)
  • Shut down electrical appliances such as TV and computers completely when not in use, or even unplug them altogether
  • Use appliances with the energy label “A”, LED lamps and energy-saving bulbs, avoiding devices with high energy consumption, such as aquariums and fan heaters

Lower the indoor temperature to save on electricity. Photo: Pixabay
 

Lower purchasing power
 
Even though Switzerland’s inflation dropped to 1.7 percent in June — the lowest level since the war in Ukraine started in February 2022 — the cost of living is continuing to climb.

Not only have all the above-mentioned services gone up, but so have the prices of many essential consumer goods, including food, which have risen by approximately 20 percent. 

TIP: There is obviously not much you can do about food prices. You can, however try to save by shopping in the least expensive stores, for example in Aldi and Lidl, where products are typically cheaper than at Migros and Coop.

You can also opt for cheaper items, collect loyality points to save money and keep an eye on coupons. 

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SHOPPING

REVEALED : Are ‘discount’ supermarkets in Switzerland really cheaper?

Lidl, Aldi and Denner claim their prices beat those of large Swiss retailers. But is this really the case?

Published: 18 April 2024 11:40 CEST
Updated: 1 May 2024 06:35 CEST
REVEALED : Are ‘discount’ supermarkets in Switzerland really cheaper?

Common consumer goods (except one) are typically more expensive in Switzerland than in neighbour countries — sometimes by much.

This includes food.

READ ALSO: Why Switzerland is the most expensive country in Europe

That is especially the case of largest Swiss chains, Migros and Coop, while Denner, Lidl, and Aldi say their food prices are significantly lower.

To find out whether this claim is actually true, journalists from RTS public broadcaster’s consumer programme went shopping in each of these supermarkets. 

They purchased the same 30 products in each of the five supermarkets on the same day, to ensure that the price comparison is as accurate as possible.

Not what you’d expect

In each of the stores, the investigators purchased only the lowest priced items from the supermarkets’ budget lines.

It turned out that most money was spent at Denner, widely considered to be one of the lowest-priced supermarkets.

The total for the 30 items came to 181.67 francs — more than was spent at the country’s more expensive stores, Migros and Coop, where identical basket of goods cost 170.37 and 167.82 francs, respectively.

(That, in itself, is surprising as well, because Migros typically has lower prices than Coop).

As for the other two supermarkets, these purchases cost 166.59 francs at Aldi and 162.05 at Lidl.

So the difference in price between Migros and Coop versus Aldi and Lidl is minimal. But what is even more surprising is that the cost of groceries at ‘cheap’ Denner is actually highest of the lot, by between 11 and nearly 20 francs.

Migros and Coop performed quite well in the comparison survey because most of the items purchased in those stores came from their budget lines, M-Budget and Prix-Garantie, respectively, both of which were introduced to compete with Aldi and Lidl.

But how important is price? Patrick Krauskopf, a professor of anti-trust law, told RTS: “German, French, English, Spanish and American consumers pay a lot of attention to price. In Switzerland, consumers place more emphasis on quality of service. Price is almost secondary.

“Distributors have realised this and have stopped competing fiercely on price.”

Big versus small

While this particular analysis focused on supermarket chains, another survey, conducted at the end of 2023, looked at prices in small grocery shops. 

Common logic has it that it is cheaper to shop in supermarkets than a local corner store, because big retailers purchase products in large quantities, which means lower prices for consumers.

However, prices in some local shops were found to be “up to 30 percent cheaper than Migros and Coop.” 

The reason is that in order to cut costs, small grocers may buy their products from the most cost-effective suppliers, a tactic which includes importing some items.

Another reason for lower prices is that unlike major supermarkets, which ‘pretty up’ their stores for better presentation of products, these small retailers are ‘no-frill’ shops. This means little money is invested in décor, so there are no extra costs to pass on to consumers.

 READ ALSO: Why it might be cheaper to avoid the big supermarkets in Switzerland
 

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