Food, energy and housing costs are rising in Switzerland and consumers are beginning to change their spending habits. So far inflation in Switzerland has been moderate with annual inflation of 2.5%. However, according to FRC, a consumer association in French-speaking Switzerland, recent price rises are only the beginning, reported RTS.
The biggest driver of Swiss inflation is energy where prices have leapt 25%. This appears to be affecting consumer behaviour. During the first week of March purchases of petrol dropped by 10-15% in Switzerland. This could reflect lower consumption or a jump in the number of people filling up across the border where governments have cut fuel taxes in response to rising fuel costs.
Pascal Jeannera of the FRC described the 75% rise in the price of mazout, an oil used to heat homes, as a ticking time bomb. Consumers only feel the pain of such price rises when they need to refill their tanks so it takes time for these higher prices to bite. The rise in pump prices of around 30% has been relatively lower, a reflection of the higher per-litre tax added to motoring fuel compared to mazout. In some parts of Switzerland gas prices have leapt by 90%. The prices of other goods and services reliant on fossil fuels have risen too. Flights now cost 50% more than a year ago, according to Jeannera.
Stefan Meierhans, also known as Mr Price, has a similar view to the FRC. Meierhans, a government appointed price watch dog, describes 2022 as a year of many challenges on the financial front, especially for those on low incomes. He is also concerned that businesses may use current cost movements as cover to make unjustified price increases, something made easier by the lack of transparency in Switzerland that gets in the way of greater price competition. Meierhans points in particular at Switzerland’s electricity network which he says charges unjustifiably high prices. He argues for federal government intervention to push down these charges, something that could save Switzerland’s consumers millions of francs.
With annual inflation of 2.5% Switzerland is fairing better than most countries. Prices in the US are up 8%, inflation in the UK is forecast to exceed 10% and ranges from 5% to 10% across much of the rest of Europe.
Since the end of January 2022 a strengthening Swiss franc has dampened the local rise in prices of imported goods and services. However, as central banks abroad begin to increase interest rates relative to Swiss rates, there is now downward pressure on the franc which has already weakened by around 2.5% against the Euro over the last month. A weaker franc means more expensive imports.