2024 - Inflation is highly dependent on lifestyle

Inflation has also arrived in Switzerland. But how badly does it really affect people? A comparison of different households shows that there are big differences in individual inflation. Three examples.

Life has become significantly more expensive in recent months: In the USA, the inflation rate was 8.6 percent in May, and consumers in the euro zone had 8.1 percent more spending than in the previous year. In Switzerland, the rate of inflation is comparatively low at 2.9 percent. But it is also rising – in April consumers still had to spend 2.4 percent more than in the same month last year.

But inflation does not affect everyone equally: individual lifestyle in particular, but also factors such as place of residence and household size have an impact on how much more expensive life becomes for each individual.

We tested how inflation affects three fictional households with completely different lifestyles: a student with a frugal lifestyle, a family in the country and a spending-happy couple in the city. That’s why we have it inflation calculator used by the Federal Statistical Office (BfS). It asks about the monthly expenses of a household in various categories – such as food, clothing, housing and transport – and calculates by what percentage the expenses of this household have increased overall.

The frugal student

Johanna studies environmental sciences at the ETH. She lives in a shared flat in Oerlikon. Because she has little money at her disposal, she lives very frugally, cooks a lot herself and rarely buys new clothes. She is vegetarian and does not have a car. She uses the bicycle, tram and bus to get around, but does not travel by plane.

expenses per month: Johanna’s biggest expense is the rent, for which she spends 800 francs. Other major items are food (CHF 200), health care (CHF 300), meals in the cafeteria and restaurants (CHF 175) and local public transport (CHF 100). Overall, she spends an average of CHF 2,250 per month.

Her life has become so expensive: Johanna is hardly affected by the rising prices. Compared to the previous year, she spent 1.2 percent more in May 2022, i.e. around 27 francs.

The family in the country

The married couple Beat and Margit Steiner live with their two children in a village in the canton of Thurgau. Public transport is not well developed there. The Steiners therefore have two cars with which they make all trips and also commute to work. They seldom go to a restaurant and once a year they go on long family vacations by car.

Expenditures per month: Since they live in the country, the Steiner family pays a relatively low rent of 1,300 francs. On the other hand, she has high expenses for traffic and transport: on average, she spends almost 1,500 francs a month on vehicle purchases and maintenance as well as petrol. Other major items are healthcare at 1,200 francs and groceries at 900 francs. In total, the family has monthly expenses of around 7,600 francs.

Her life has become so expensive: The Steiner family is more affected by the current price increase than Johanna. Your personal inflation is 3.2 percent, which is also slightly above the Swiss average. So she spends around 240 francs more per month than a year ago.

The couple in the city

Mareike and Simon are a couple from Zurich. They are both professionally successful and have no children. Accordingly, they allow themselves an exuberant lifestyle: they eat out several times a week and travel a lot, for example taking short trips to London or Rome at the weekends. They also have a car, but they share it. But they like to go shopping and buy a few new clothes every month.

Expenditures per month: Mareike and Simon pay more than 2,000 francs in rent for their two-room apartment in Zurich, plus ancillary costs of 250 francs. They spend about 1800 francs a month on expensive restaurants and hotels. On average, their car costs them just under 700 francs a month, and they pay just as much for flights. In total, they spend around 8,900 francs a month.

Her life has become so expensive: Mareike and Simon are severely affected by inflation. Your personal inflation rate is 6.7 percent, around 600 francs more than in May 2021.

Air travel, car travel and energy particularly affected by inflation

The results from the calculator should be interpreted with caution because it uses a greatly simplified calculation method for the inflation rate. Nevertheless, they give a very good impression of how the individual living conditions affect the inflation experienced.

The fact that the respective inflation rates of our example households are so different is because different categories such as housing, transport and food account for different proportions of their respective total expenditure. To calculate nationwide inflation (national index of consumer prices), the BfS uses a basket of goods that reflects the Swiss average and from which the baskets of individual households deviate to varying degrees.

In the shopping cart of the BfS, housing and energy make up the largest part of expenditure at 26.6 percent. Other major items are health care (16.7 percent), food (12.6 percent) and transport (11 percent). Not all of these product groups are affected by the current price increases.

In the residential sector, for example, rents have hardly risen at all, but heating costs have. The transport sector is particularly affected by the rise in prices. Because of the high fuel prices, both driving and flying have become more expensive. In the case of leisure and culture, the higher costs for package tours are noticeable, as are the prices for furniture and fixtures in the household. So far, there have been little or no price increases for groceries, restaurants and health care.

While it is common practice to compare current prices to those of the same month last year and calculate the rate of change as a percentage, this representation is not always ideal. A year ago, the corona pandemic caused extraordinarily low energy and flight prices. If prices then rise only slightly above the normal level, this is reflected in a very high rate of change. Inflation is overstated.

It may therefore be better to compare the current prices with those of other years and months. The following charts show the development of the national index of consumer prices with December 2020 as the basis: At this point in time it is at 100.

Prices in most spending groups are currently above the 2020 level. However, a comparison with 2019 – the year before the corona pandemic – shows that only the prices for transport, housing and energy are significantly higher than before the crisis.

Motorists in particular are facing higher costs this year. A liter of unleaded 95 petrol currently costs around 50 cents more on average in Switzerland than it did in January. Let’s remember the Steiner family. Because it has higher fuel costs than the average Swiss household, it is also more severely affected by the current inflation.

Air travel prices have increased even more. In addition to fuel costs, the demand for tickets has risen sharply recently, but the airlines have less capacity than before the Corona crisis due to staff cuts. Mainly because Mareike and Simon fly a lot, their personal inflation is much higher than average.

Rents have hardly gotten any higher so far, but energy costs have risen all the more. Above all, the 60 percent of the Swiss population who live in buildings with oil or gas heating will have to adjust to massively higher ancillary costs in the current year. According to Calculations by the real estate economists at Credit Suisse (CS) the ancillary costs in such apartments will increase by 530 francs to around 1900 francs this year. This corresponds to a premium of 38 percent.

You can read more about additional costs here.