Visitors to Switzerland may find Swiss pricing to be outlandish when compared to their own currencies due to currency appreciation. But from a purely technical standpoint, it’s mainly because the value of the Swiss franc has increased significantly over time relative to other currencies. Prices in Swiss francs have been fairly steady with no inflation.
Many nations in other regions of Europe are experiencing double-digit inflation. However, Switzerland’s inflation rate for the year ending in June 2022 will be 3.3%. There are several causes for this:
Despite accounting for nearly 20% of the CPI, healthcare prices decreased this year, mostly due to pressure from the government to lower insurance premiums. Less energy is used in gas and oil, with 66% coming from hydroelectric power and 34% from nuclear.
The Swiss have made an effort to produce their own food, so they are protected from many of the spikes in food prices in other areas of the world. Only 6% of all imports into Switzerland are food and drink-related.
Inflation is also countered by the strong franc. Investors have historically preferred the Swiss Franc during tumultuous times. Given that these people earn some of the highest salaries in the world, there isn’t much wage inflation or excessive consumer demand pushing up prices.
Consumers are getting better at spotting deals, and the government has passed regulations to prevent companies from raising prices for the Swiss market in response to Switzerland’s relatively higher consumer costs than those in other parts of Europe.
Numerous export-oriented sectors of the Swiss economy have historically enjoyed substantial margins and frequently operate in very inelastic markets. Businesses are typically better able to bear rising expenses for the domestic market despite COVID. Despite the strong franc, higher foreign inflation offers Swiss businesses opportunity to profit.
Swiss inflation held steady at 3.0% in November
According to figures released on Thursday, Swiss consumer price inflation remained stable at 3.0% in November but nevertheless exceeded the 0-2% target range set by the Swiss National Bank for the tenth consecutive month.
The average economist had predicted that the year-over-year rate would remain at 3.0% in October, down from mid-year peaks that reached a nearly three-decade high.
Rent, gas, fuel, and red wine costs rose. While those for heating oil, produce, and hotel accommodations declined. Thus prices were stable month over month.
Core inflation, which excludes volatile costs like food and gasoline. It increased 0.1% from October to November and 1.9% from year to year.
The inflation numbers come after news on Tuesday. That the Swiss economy shrank to 0.5% year-over-year. Below market estimates, It increased by a real 0.2% in the third quarter of 2022. This compared to the second three months of 2022.
-1675846806.png)
