The Deloitte Pulse of Switzerland survey shows how the Swiss are adjusting their habits and spending to a 6% rise in prices.

From 2022, inflation and rising prices will put pressure on the budgets of many Swiss residents, which will change their consumption behavior.

In terms of purchasing power, Switzerland has a doubly enviable situation: on the one hand, people there enjoy a much higher standard of living on average than their neighbors; disposable income per capita is almost €50,000 per year (compared to just over half that amount in Austria or Germany).

On the other hand, inflation, which erodes purchasing power, has been much lower in Switzerland in recent years. While overall prices in Germany increased by around 17% between December 2020 and the end of 2023, Switzerland saw an increase of only 6%. Over the same period, food prices rose more significantly in several countries (31% in Germany, 40% in Great Britain or 43% in Estonia), compared to another 6% in Switzerland.

According to a survey commissioned by Deloitte between November 2022 and November 2023 among 1,900 consumers in Switzerland, inflation was a burden for many people. This has led to changes in behavior that are likely to last, at least in part.

• 27% of respondents indicate that inflation has been a major burden in the past twelve months, and an average of 38% of them. The values ​​for French-speaking Switzerland are slightly higher

• This burden led to behavioral change in two forms. On the one hand, insignificant costs have decreased. 52% of respondents limited visiting and eating in restaurants. More than 40% of them cut spending on entertainment, as well as on the purchase of furniture, appliances or clothes.

• 41% also limited their trips abroad. More than a third of the respondents tried to reduce their expenses, including on food. Food is a necessary and common expense that, according to the Federal Bureau of Statistics, accounts for about 8% of the average family budget.

• 9 out of 10 Swiss continued to invest in education, which remains a priority

Purchasing power, and the inflation that erodes that purchasing power, are major topics that affect consumers’ wallets. As our survey showed, Swiss consumers are sensitive to price increases. This applies to consumer prices and price increases driven by policy measures such as rent and health insurance. They are now being given great importance and political pressure for action is mounting. Not every measure is necessarily correct, and the risk of choosing illusory solutions is high.

The Swiss electorate may soon have their say on these and other important topics for the country’s economy. In March 2024, two opposing annuity initiatives will be voted on. The term “opposite” here should be understood in the context of intergenerational equity: while one initiative aims to facilitate younger generations, the other will lead to increased contributions.

An aging population will place a greater burden on younger generations, while many retirees are now in an enviable financial position. Instead of focusing on large-scale increases in pensions, the fight against poverty among the elderly would be more equitable, writes Deloitte.

This fight and others will show whether Switzerland can meet two challenges: on the one hand, to find real solutions to pressing economic problems, including the rising cost of housing and health care, and on the other hand, to identify solutions to maintain Switzerland’s competitiveness.