Why is Switzerland about to become even more expensive?
Swiss prices are already notoriously high, but they are expected to climb even more. This is why.
The reason for increasing costs is actually good: global economic recovery. It pushed the demand around the world for certain products and services.
There is also inflation, which could “temporarily exceed 1 percent in Switzerland ,” according to Matthias Geissbühler, head of investments at Raiffeisen Bank.
This number is still lower than in Germany (2 percent) and the United States (4.2 percent), he said.
What will get more expensive in Switzerland?
Gasoline has become almost 16 percent more expensive, while heating oil costs around 20 percent more.
Coffee and corn also cost a third more than at the beginning of the year.
"With the easing of measures to combat the pandemic, demand is increasing sharply around the world, while, at the same time, supply is stagnating.”, Geissbühler pointed out.
That’s because supply chains are still interrupted or limited in many places. Demand far exceeds supply, pushing prices up.
“With the pandemic, many freighters have temporarily suspended their activities. The tariff for the transport of goods therefore increases rapidly. The prices of other imported products, such as construction materials and microchips, will also rise in Switzerland”, he added.
This means electronics, as well as new houses, are bound to cost more this year.
The residents of Switzerland, including those who settle here from abroad, know that the country is especially pricey when it comes to food, beverages, hotels, housing, restaurants, clothing, and health insurance – or pretty much everything you need.
Various studies have shown time and again that Swiss consumers pay much more for basic goods and services than their European counterparts, with the exception of Norway and Iceland.
For instance, one such study found that people in Switzerland have to pay 168 francs for a basket of consumer goods costing on average 100 euros in the EU.
In fact, in a new survey of expatriates around the world, those living in Switzerland said affordability was one of the main reasons they disliked living in the country.
In fact, 65 percent of respondents said they are dissatisfied with the prices in Switzerland, versus 34 percent globally.
While in this particular case, global economic recovery along with inflation are to blame for rising prices, generally they can be attributed to protectionism and lack of competition, which are inter-related, as the former invariably leads to the latter.
Also, a study by the University of Applied Sciences of Northwestern Switzerland shows that foreign producers and suppliers impose large price increases in Switzerland, exploiting high salaries and consumers’ purchasing power.
This is the reason why so many people living in border regions go shopping in France, Italy, and Germany, where the same items are considerably cheaper.
READ MORE: Why is Switzerland so expensive?