Inflation in Switzerland: Seniors are hardest hit by rising prices

Inflation remains sensitive for Swiss households: according to the Comparis housing price index, housing and mobility costs increased by 1.7% last year – tenants are particularly affected.

Swiss households must continue to fight inflation and are feeling the effects of rising prices. According to the Comparis-Womo price index, goods and services increased by 1.7% in November 2024 compared to the same month of the previous year. The increase is particularly noticeable for rents, which have increased by 0.5% in the last three months alone. Over a period of five years, the increase is even 9%.

The Comparis price index, published quarterly since March 2024 in collaboration with the KOF Economic Research Center at the ETH Zurich, shows how inflation has evolved in the areas of housing and mobility (Womo).

According to the Womo price index, housing and mobility prices in Switzerland increased by 1.7% in November 2024 compared to the same month of the previous year. For comparison, the national consumer price index (CPI) of the Federal Statistical Office (FSO), which covers a basket of more than 1,000 goods and services, increased by only 0 .7 percent*.

Compared to August 2024, prices in the Swiss house price index from Comparis increased by 0.1% (CPI: minus 0.6%). Apartment rents alone have increased by 0.5% over the past three months. Compared to the same month of the previous year, this represents even 3.4 percent.

An additional cost of 755 francs for a family

“For an average family in Switzerland, housing and mobility represent around 40 percent of the daily consumption budget. This is why price increases are particularly painful for consumers,” explains Dirk Renkert, financial expert at Comparis.

In the housing sector, the price index records the evolution of the prices of rent and energy as well as household goods such as furniture. In the mobility sector, this concerns, for example, the price of gasoline or diesel, the car or public transport tickets.

Concretely, an increase of 1.7% in the price index means that if a family spent last year 2,500 francs per month for the rent of their apartment, 1,000 francs for their car and 200 francs for public transport tickets, costs increased by around 63 francs per month compared to the previous year. Over the entire year, this represents an additional cost of 755 francs just for housing and mobility.

The benchmark mortgage interest rate is expected to fall again in 2025

Housing rents have increased by 9.3% over the last 5 years. Compared over two years, they increased by 5.9 percent. This figure includes increases in existing rents due to the increase in the benchmark mortgage rate. The benchmark mortgage rate is calculated from the average interest rate of national mortgages outstanding with banks. Due to the sharp rise in mortgage rates, it rose from 1.25% to 1.75% in two stages in 2023. This increase was accompanied by an increase in rents by landlords.

Since the start of 2024, mortgage loan conditions have become significantly more favorable, as inflation has fallen sharply and the Swiss National Bank (SNB) has continuously lowered its key rate since March. With the sharp drop in mortgage rates, the mortgage reference rate should therefore soon fall again.

The tenants concerned will then be entitled to rent reductions. If the benchmark mortgage rate falls by 0.25 percentage points, that means a rent reduction of 2.9%. However, landlords can charge 40 percent of the accumulated cost increase plus a flat rate of 0.5 percent per year as a general increase in costs.

“The expected drop in the benchmark interest rate is expected to provide temporary relief to existing rents. Conversely, new tenants are faced with a persistent increase in rents offered due to the housing shortage. Rising rents are and will remain an important factor in inflation in the future,” says Renkert.

Biggest price increase in last three months

Since August 2024, flooring and carpet prices have seen the largest increase compared to November 2024, at 5.5%. The prices of bicycles and e-bikes also increased (up 5.3%), as well as those for home repair materials (up 5.2%). Prices for living room and office furniture (up 2.4%) and power tools for the home and garden (up 1.6%) also increased.

Biggest price drop in last three months: In comparison over 3 months, it is the fuel that has seen the biggest drop in price. Last month, prices fell by 5.8 percent compared to August 2024. Furthermore, other everyday consumer goods for the household (minus 2.5 percent) and energy for heating (gas, fuel oil, firewood and district heating) (minus 1.9 percent) became cheaper during the same period. Prices of new and used automobiles also fell, by 1.1% and 1.0%, respectively.

The highest increase concerns households with one person aged 65 and over: Depending on the type of household, households with one person aged 65 and over have experienced the highest increases in housing and mobility costs over the last 12 months. They are currently experiencing an inflation rate of 2.3% compared to the previous year. In November 2024, the cost of living increased by another 0.1% compared to August 2024.

From a purely mathematical point of view, couples aged 65 and over without children are the least affected in percentage terms. With an index of 111.5, the increase in costs felt in the areas of housing and mobility amounted to 1.4% for you over the last 12 months. In a three-month comparison, inflation decreased by 0.2 percent in November 2024.

The lowest income class feels the increase the most: In income classes, we see that it is for the lowest income class that the cost of living has increased the most compared to the previous year. The price index increased by 2.3% for this class. Compared to August 2024, the increase in prices remained unchanged.

The highest income category was the least affected by the increase in prices. Compared to the previous year, prices increased by 1.5 percent for it. Over the past three months, consumption for the highest income class has been 0.3 percent cheaper.

The highest inflation in French-speaking Switzerland: If we break down the figures by linguistic region, we obtain the following table: French-speaking Switzerland recorded the highest increase in prices compared to the previous year, with over 1.8 percent. Compared to August 2024, the price level fell by 0.1 percent.

German-speaking Switzerland and Rhaeto-Roman Switzerland experienced the comparatively lowest inflation compared to the previous year, with more than 1.7%. Compared to three months ago, prices in the areas of housing and mobility were 0.1 percent lower.