The fact that the cost of living in Switzerland is already so high contributes to the low inflation rate.
“When compared to our European neighbors, one of the characteristics of Switzerland is that we tend to have high costs in nearly everything,” said Nannette Hechler-Fayd’herbe, global head of economics and research at Credit Suisse.
A cottage industry of ‘delivery address’ enterprises has developed up an hour’s drive from Zurich, just across the border into Germany, charging Swiss clients a nominal charge to hold products they order at cheap German rates and later collect.
“People come here because they can get good deals,” said German entrepreneur Mandy Klein, who started her delivery address business from home in 2009 and now has two locations in the gorgeous lakeside German border town of Constance.
The brisk delivery commerce in Constance demonstrates Swiss households’ desire to cut costs wherever they can. Despite this, Eurostat data reveal that the price level for household consumption expenditure in Switzerland was still 60% higher in 2020 than the euro area average.
As a result, consumer groups, fed up with Switzerland’s reputation as a “high-price island,” agitated for political action, resulting in two legislative reforms that took effect at the start of this year to provide consumers a better deal.
The first strengthened Switzerland’s cartel law, making it more difficult for companies to mark up their pricing for the Swiss market.
The second legislation outlawed so-called geo-blocking, which is a technique employed by shops to prevent internet buyers from purchasing cheaper goods or services from foreign websites by redirecting them to Swiss websites, for example.
Prisca Birrer-Heimo, a Social Democrat lawmaker who co-led a ‘fair price initiative’ demanding reform, has already seen results.
Swiss market characteristics, as well as the weighting of certain essential goods in the consumer price index (CPI), contribute to Switzerland’s low inflation.
According to OECD data, healthcare, which is delivered by private enterprises, accounts for 17 percent of the CPI index, compared to 7% in the United States and 5% in Germany. The government has pushed health insurers to lower premiums.
“This has been an area that, rather than causing inflation and price hikes, has experienced the opposite as a result of political pressure,” said Credit Suisse’s Hechler-Fayd’herbe.
Hydropower accounts for about 57 percent of Switzerland’s energy production, thanks to the country’s lakes, rivers, and mountainous terrain, according to the federal energy office, making the Swiss significantly less vulnerable to rising oil and gas prices than other countries.
According to OECD data, energy accounts for only 5% of the Swiss CPI basket, compared to 7% in the US and 10% in Germany, where consumers are significantly more susceptible to growing fossil fuel prices.
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“Our best forecast is that (average) inflation in Switzerland will be 1.8 percent in 2022,” said Credit Suisse’s Hechler-Fayd’herbe, “but the current spike in oil prices raises the probability of a somewhat higher rate.” “We expect inflation to average 1.0 percent in 2023.”
There is less demand for pay increases because earnings are already higher than in practically every other European country. Swisscom (SCMN.S), a telecommunications company, is only boosting compensation by 0.9 percent this year.
The strong franc is also beneficial. The franc, which is seen as a safe haven, temporarily climbed over parity with the euro this month, hitting a seven-year high.
The currency’s purchasing power protects Switzerland from increased import costs and feeds into the country’s stable price environment, giving exporters an advantage over overseas competitors experiencing higher inflation.
Half of the electrical and mechanical engineering industry’s exports, according to Jean-Philippe Kohl, vice director and head of economic policy at Swissmem, go to the euro zone, where inflation is hovering around 6%.
“A Swiss company that manufactures a product here and sells it in the euro zone will be able to sell it at a higher price sooner or later… so you profit from it,” he said.
What is Switzerland’s average inflation rate?
The rate of change between the annual average and the rate of change between the annual average and the rate of change between the annual average and the rate of change between the annual average and the rate of change between
of the CPI for the years 2021 and 2020 The arithmetic mean of the 12 months is used to calculate the annual average.
The calendar year’s monthly indices. In 2021, yearly inflation was +0.6% on average. Higher pricing for fuel items and home rentals are contributing to this growth. Prices for international package trips and pharmaceuticals, on the other hand, have decreased. Prices in the United States climbed by 0.3 percent on average, while prices in other countries increased by 1.5 percent. The average annual inflation rate was 0.7% in 2020 and +0.4% in 2019.
The CPI fell 0.1 percent in December 2021 compared to the previous month due to a number of variables, including lower heating oil prices. The cost of air travel, as well as the cost of gasoline, has decreased. Prices for private transportation, hotel accommodations, and used cars, on the other hand, have risen.
The following PDF document contains additional information, including tables and graphs.
What accounts for Switzerland’s low inflation rate?
Switzerland’s mild price pressures are due to a number of reasons, including consumer demand for better bargains, an energy mix that protects the country from rising oil and gas prices, wage restraint, and some protection from import price inflation thanks to the strong franc.
In Switzerland, what causes inflation?
Even during the 1973 oil crisis, inflation in the Alpine country was just approximately 9%, whereas inflation in other countries was significantly greater. The fundamental cause for this is the Swiss National Bank’s monetary policy (SNB).
Has there ever been inflation in Switzerland?
From 1956 to 2022, the inflation rate in Switzerland averaged 2.29 percent, with a high of 11.92 percent in December 1973 and a low of -1.40 percent in August 2015.
Is English spoken in Switzerland?
Swiss German is spoken by approximately 63 percent of the population (the vast majority of those people genuinely speak Swiss German), French by 23%, Italian by 8%, and Romansh by 0.5 percent (approximately 50,000 people).
According to 2019 data, 68 percent of over-15s utilize more than one language at least once a week, whether chatting with relatives or coworkers, surfing the internet, reading, or watching TV. The remaining 32%, down from 36% in 2014, indicated they only speak one language. The older a person gets, the more likely it is that they will exclusively speak one language. According to the survey, 38 percent use two languages on a regular basis, 21 percent use three, 6.4 percent use four, and 1.7 percent use at least five.
English is the most widely spoken non-national language in Switzerland, with 45 percent of the population speaking it regularly. The German-speaking section of the country has a higher English literacy rate than the Italian- and French-speaking regions (46 percent vs 37 percent and 43 percent respectively).
Nearly three-quarters of 15-24-year-olds stated they spoke, wrote, read, or listened to English at least once a week in 2019, up ten percentage points from 2014.
What is the inflation rate for 2021?
The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. This suggests that the dollar’s purchasing power has deteriorated in recent years.
What will be the rate of inflation in 2022?
According to a Bloomberg survey of experts, the average annual CPI is expected to grow 5.1 percent in 2022, up from 4.7 percent last year.
What is the size of the Swiss Army?
As of 1 March 2017, the Swiss Armed Forces had 120,496 active duty personnel (known in Switzerland as Angehriger der Armee, or AdA, engl.: Member of the Armed Forces), with 9,163 of them being professionals and the remainder being conscripts or volunteers. Women who volunteered for military service numbered 929, accounting for less than 1% of the total, with over 25% of officers. By 2021, the numbers had risen. Women have the same rights and responsibilities as males in the military, and they can join any service, including combat forces. Recruits in multilingual Switzerland are often taught in their local language, with the exception of a small minority of Romansh-speaking recruits who are taught in German.
Officers are not typically career regulars, as they are in most other comparable military forces. Under the most recent army reform, all soldiers must attend a full 18-week recruit school. Recruits may volunteer for consideration to continue with NCO training throughout the initial 18-week training term. Individuals are promoted to sergeant and incorporated into platoons at recruit schools as squad leaders after completing NCO training (Gruppenchefs, Chefs de Groupe, Capogruppi). With the exception of those who volunteer for officer school, who leave after 7 weeks of service as squad leaders, and those who volunteer for higher NCO school, who leave after 12 weeks of service as squad leaders, squad leaders support their platoon commanders for the entire 18-week recruit school. Officer candidates must take a 15-week course to prepare for their job as platoon leaders (Zugfhrer, Chef de section, Caposezione), which includes a 100-kilometer (62-mile) march over 24 hours. Platoon leaders return to their recruit schools after promotion to lieutenant and take command of a recruit school platoon for 18 weeks.
In 2021, the Swiss Armed Forces had roughly 15,000 officers and 29,000 non-commissioned officers. Higher-ranking officers serve for longer periods of time each year; a private may serve for 365 days over the course of 30 years, but a high-ranking officer may serve for 2,000 days before retiring. Every advancement necessitates extra time, which is referred to as “paying your rank.” This is the procedure by which a soldier completes the required minimum service time for their rank after being promoted to that rank. Companies support military training by paying employees who include their ranks and duties on their rsums.