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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

Do adult children in Switzerland have to support their parents financially?

Usually, it is the parents’ responsibility to ensure their kids are well taken care of financially. But can Swiss authorities force the children to return the favour in times of need?

Published: 30 April 2024 15:31 CEST
Updated: 5 May 2024 08:14 CEST
Do adult children in Switzerland have to support their parents financially?

In most cases, once children are grown up and out of the house, they are (or at least should be) self-sufficient in terms of finances.

Parents too should breathe a sigh of relief that they are no longer obligated to pay for their children’s expenses, except perhaps for giving them some money here and there as a gift.

This is what happens in the best-case scenario.

But what if things don’t go according to this plan — for instance, if the parents find themselves in financial straits and can’t  afford to pay their bills?

Family obligations

Generally speaking, the truly needy people who don’t have enough income to pay for their basic living expenses will receive financial help from the government, in the very least in the form of the health insurance and housing subsidy.

READ ALSO: Can I get financial help in Switzerland if I’m struggling to pay the bills?

However, before doling out public money, authorities will see whether relatives should be made to help the struggling individuals pay their bills.

(In this context, ‘relatives’ means only those in the direct line of descent: grandparents, parents, and children.)

They will do it by checking the tax status of these relatives — how much they earn and what other financial assets they have — to determine whether, and how much, they should be paying toward their parents’ expenses.

Obviously, you will be expected to pay up only if your own financial situation allows it; you will not be forced to part with your money if you have very little of it yourself.

 ‘Favourable financial circumstaces’

Based on a Federal Court ruling, if the adult child  lives in ‘favourable financial circumstances’ they are required to help out their struggling parents.

The Court defined ‘favourable financial circumstances’ as income and assets allowing a comfortable life.

‘Comfortable life’, in turn, was defined by the Swiss Conference for Social Welfare (SKOS), as a taxable annual income of 120,000 francs for a single person, and 180,000 francs for married couples.

“If you have minors in your household, the limit is increased by 20,000 francs per child,” according to AXA insurance.

It goes on to say that you can deduct an exempt amount from your taxable assets.

“Your annual depletion of assets is deducted from the remaining amount. This means that if you are obligated to provide financial support, you are permitted to use part of your assets yourself each year; you don’t have to devote your entire assets to providing support.”

At between 18 and 30 years of age, this is 1/60th per year; from 31 to 40, 1/50th per year; 41 to 50, 1/40th per year; 51 to 60, 1/30th per year; and from the age of 61,1/20th per year. 

Are there any exemptions to these rules?

Aside from not having sufficient funds, you could be exempted from paying if, say, your parents, or parent, have not lived up to their own financial obligations toward you.

In Switzerland, parents are required to  provide financially for their children until the age of majority, and even beyond that if they are still studying or undergoing vocational training — typically, until the mid-20s.

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