Everyday essentials become costlier despite lower inflation

Prices for some essentials have risen sharply over the past decade Keystone

Inflation has fallen in pricey Switzerland, but the cost of some of the more essential things in life – such as housing and education – keeps going up and up.

Despite Switzerland’s reputation as a “high-price island”, the average annualised inflation rate in 2016 fell by 0.4%, according to the Federal Statistical Office on Thursday.

The Swiss Consumer Price Index (CPI) fell by 0.1% in December compared with the previous month. Inflation was 0% in comparison with the same month in the previous year, the office reportedExternal link.

A swissinfo.ch graphic, however, shows some surprisingly divergent paths in the evolution in prices of different goods and services in Switzerland since 2000. In other words, some essentials have gotten more expensive, while some less-essential items are cheaper than before.

Some basic goods and services such as housing and education have increased by 25%.

By contrast, “leisure” items such as communications (fixed and mobile phones) and recreation and culture (electronics, holidays, sports, and books) have decreased the most in price.

Ups and downs

Not everything fits into this pattern. Costs for alcohol and tobacco, and for restaurants and hotels, have risen sharply. Prices have generally remained flat for more essential items, like healthcare and transport.

Consumer confidence remains low compared with peaks three years ago, six years ago and a decade ago. There was hardly any change in consumer sentimentExternal link in Switzerland in the latest survey between July and October, according to the State Secretariat for Economic Affairs (SECO), which conducts a private household survey on a quarterly basis.

The survey is intended to measure factors such as consumer expectations, their financial situation, development of prices and job security. However, consumers believed the outlook for the economy was considerably better than in July.