How Covid, inflation and the Ukraine invasion has made Switzerland more expensive
Swiss prices are going up due to two inter-related factors: war in Ukraine and inflation, the latter of which is influenced by the lingering impacts of the Covid pandemic. Here’s an overview of some consumer goods that now cost more.
Switzerland is known for being expensive, but in recent months the cost of living has risen higher.
Uncertainty surrounding the Covid pandemic since the first lockdowns were imposed in early 2020 led to problematic economic consequences, which in turn led to inflation.
READ MORE: How to protect your savings against inflation in Switzerland
More recently, Russia's invasion of Ukraine drove up prices of raw materials, fuelling inflation and higher cost of consumer goods.
Inflation in Switzerland stood at 2.2 percent at the end of February, which is obviously not a good thing but it is still significantly lower than in many other countries. For example, inflation rate is 5.8 percent in the EU. 6.2 percent in the UK, and 7.9 percent in the United States.
So the situation in Switzerland is better than elsewhere, as it usually is during times of economic uncertainties.
"We have been confronted with rising energy and raw material costs since last autumn, but the war in Ukraine has made the situation even worse", said Migros CEO Fabrice Zumbrunnen.
Which prices have increased the most?
The sector most impacted by the war / inflation is energy — namely natural gas, petrol, diesel and heating oil.
The prices of petroleum products in Switzerland rose by 6.1 percent after the invasion, according to a report by SRF public broadcaster.
The increase is not surprising per se, as Switzerland imports Russian natural gas and oil for energy production. While the reliance on Russian oil is comparatively minimal, Switzerland has a heavier dependence on natural gas from Russia, which provides around an eighth of Switzerland’s total energy supply.
READ MORE: Ukraine invasion: How reliant is Switzerland on Russia for energy?
As a result, a litre of unleaded grade 95 petrol, whose price hovered just below 1.90 francs before the war, now costs around 2.30 francs in many Swiss regions, and it likely won’t stop there.
According to the Economy Minister Guy Parmelin, the price of 4 francs per litre cannot be ruled out. “That is one possible scenario”, he said.
What about other prices?
Here the news is both good and bad — relatively speaking.
Food and non-alcoholic beverages cost only slightly more now (+0.2 percent) than they did in January. But compared to the same period last year, prices even fell by 1.1 percent, according to SRF reports.
However, this is based on average prices of all foods. When taken individually, some products, such as coffee and pasta, for instance, cost more, while others, like fruit, have become slightly cheaper.
Things could become more problematic when it comes to bread.
EXPLAINED: Why is Switzerland so expensive?
Ukraine is commonly known as the breadbasket of Europe, and there is a good reason for that: 12 percent of the world’s wheat supply comes from the Eastern-European country. It is also among the largest exporters of corn.
But only 3 percent of Switzerland’s wheat comes directly from Ukraine, with the rest sourced either locally or from the EU.
However, if the Ukrainian crisis continues, prices of bread and other wheat-based products are likely to climb. One problem could be availability and price of fertilisers used in agriculture, as natural gas (from Russia) is needed to produce them.
“We don’t know what to expect, it's all very vague", according to Pierre-Yves Perrin, director of the Swiss Federation of Cereal Producers.
This assessment is shared by Zumbrunnen, who pointed out that “it is currently very difficult to make predictions about price increases because the dependencies are so great worldwide".
READ MORE: How will the war in Ukraine impact the cost of living in Switzerland?
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Switzerland is known for being expensive, but in recent months the cost of living has risen higher.
Uncertainty surrounding the Covid pandemic since the first lockdowns were imposed in early 2020 led to problematic economic consequences, which in turn led to inflation.
READ MORE: How to protect your savings against inflation in Switzerland
More recently, Russia's invasion of Ukraine drove up prices of raw materials, fuelling inflation and higher cost of consumer goods.
Inflation in Switzerland stood at 2.2 percent at the end of February, which is obviously not a good thing but it is still significantly lower than in many other countries. For example, inflation rate is 5.8 percent in the EU. 6.2 percent in the UK, and 7.9 percent in the United States.
So the situation in Switzerland is better than elsewhere, as it usually is during times of economic uncertainties.
"We have been confronted with rising energy and raw material costs since last autumn, but the war in Ukraine has made the situation even worse", said Migros CEO Fabrice Zumbrunnen.
Which prices have increased the most?
The sector most impacted by the war / inflation is energy — namely natural gas, petrol, diesel and heating oil.
The prices of petroleum products in Switzerland rose by 6.1 percent after the invasion, according to a report by SRF public broadcaster.
The increase is not surprising per se, as Switzerland imports Russian natural gas and oil for energy production. While the reliance on Russian oil is comparatively minimal, Switzerland has a heavier dependence on natural gas from Russia, which provides around an eighth of Switzerland’s total energy supply.
READ MORE: Ukraine invasion: How reliant is Switzerland on Russia for energy?
As a result, a litre of unleaded grade 95 petrol, whose price hovered just below 1.90 francs before the war, now costs around 2.30 francs in many Swiss regions, and it likely won’t stop there.
According to the Economy Minister Guy Parmelin, the price of 4 francs per litre cannot be ruled out. “That is one possible scenario”, he said.
What about other prices?
Here the news is both good and bad — relatively speaking.
Food and non-alcoholic beverages cost only slightly more now (+0.2 percent) than they did in January. But compared to the same period last year, prices even fell by 1.1 percent, according to SRF reports.
However, this is based on average prices of all foods. When taken individually, some products, such as coffee and pasta, for instance, cost more, while others, like fruit, have become slightly cheaper.
Things could become more problematic when it comes to bread.
EXPLAINED: Why is Switzerland so expensive?
Ukraine is commonly known as the breadbasket of Europe, and there is a good reason for that: 12 percent of the world’s wheat supply comes from the Eastern-European country. It is also among the largest exporters of corn.
But only 3 percent of Switzerland’s wheat comes directly from Ukraine, with the rest sourced either locally or from the EU.
However, if the Ukrainian crisis continues, prices of bread and other wheat-based products are likely to climb. One problem could be availability and price of fertilisers used in agriculture, as natural gas (from Russia) is needed to produce them.
“We don’t know what to expect, it's all very vague", according to Pierre-Yves Perrin, director of the Swiss Federation of Cereal Producers.
This assessment is shared by Zumbrunnen, who pointed out that “it is currently very difficult to make predictions about price increases because the dependencies are so great worldwide".
READ MORE: How will the war in Ukraine impact the cost of living in Switzerland?
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