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COST OF LIVING

EXPLAINED: How coffee in Switzerland is getting more expensive

If you can’t get through the day without your dose of caffeine, the news about price hikes for this drink in Switzerland will leave a bitter taste in your mouth.

EXPLAINED: How coffee in Switzerland is getting more expensive
You have to dig deeper into your pockets to pay for this cuppa. Photo: Pixabay

Switzerland is a nation of coffee drinkers; on average, each adult resident consumes three cups a day.

If you fit into this category, you will have to dig deeper into your pockets to support your, um, drinking habit.

That’s because the price of coffee is rising quite a bit, especially in restaurants.

The reason, according to Coop, which raised the price of a cup of coffee in its restaurants by 20 cents — is the increase in the cost of raw materials, as well as higher transport and energy costs.

READ MORE: How does the cost of living crisis in Switzerland compare to other countries?

So how much will you have to pay for your daily fix?

Depending on where in Switzerland you live and what kind of coffee establishments you frequent, you have likely paid between 3.20 and 4 francs for a cup.

In the 180 Coop restaurants, where a cup coffee with cream used to cost 3.25 francs, the price is now 3.45 francs.

The price of cappuccino increased by 30 cents — from 3.65 to 3.95 francs.

In some 300 Migros restaurants, coffee with cream now costs 3.50 francs — 20 cents more than before — while a cup of cappuccino is now selling for 3.90 francs.

This is a new standard price for a cappuccino in Zurich and the eastern part of the country, while in the rest of Switzerland, it now costs 4 francs, which means a 30-cent increase.

As for Starbucks, it has raised the price of its coffee by 50 cents.

Smaller, privately owned coffee shops, which really depend on the sale of coffee, are now discussing their new price strategy, which they will reveal next week.

This price hike may be hard to swallow for coffee lovers (and leave tea enthusiasts cold), but Swiss consumers have gotten used to the increased cost of food and beverages by now.

Butter, oil, eggs…

With inflation still hovering around 3 percent, many other everyday items  have risen sharply in price as well.

For instance, among foods that people in Switzerland have to pay more for are butter (up by 10.7 percent compared to the same month a year ago), margarine, fats and oils (plus 8.9 percent), as well as milk, cheese and eggs (plus 5.9 percent).
 
READ MORE: EXPLAINED: The everyday items going up in price in Switzerland 

Non-food items have become more expensive as well. Among them are electricity and other energy sources like gas and heating oil.

However, some prices dropped at the same time: according to data released on Wednesday by the Federal Statistical Office (FSO), cost of fruits and vegetables went down in November, as did hotel accommodations, which is good news ahead of the busy Christmas travel season. 

Overall, electrical household appliances, personal hygiene and telecommunications products – like mobile phones – are now about 30 percent cheaper.

And while the price of healthcare premiums is set to increase in 2023, the cost of more than 300 medicines was slashed by an average of 10 percent in 2022. 
 
 

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PROPERTY

Swiss mortgage rates ‘climb drastically’ with more hikes on the way

Due to inflation and Switzerland’s new monetary policy, mortgages are now twice as expensive as they were a year ago.

Swiss mortgage rates 'climb drastically' with more hikes on the way

A bit of bad news for owners, or prospective buyers, of Swiss properties: they will have to pay more than double of 2022 prices for a 10-year fixed rate mortgage, Moneyland consumer platform reported on Wednesday. 

“Swiss mortgage index has climbed drastically over the past year,” Moneyland said.

Currently, the average interest rate is 2.54 percent for five-year fixed mortgages and 2.76 percent for 10-year terms. As a comparison, at the beginning of 2022, these rates were 1.01 percent and 1.26 percent, respectively. 

“On average, the cost of a ten-year fixed-rate mortgage is around double of what it was at the start of 2022,” according to Moneyland’s CEO Benjamin Manz.

Five-year mortgages are 2.5 times higher than they were in early 2022, he said.

This is not exactly a surprising development, as experts had predicted the hike when Switzerland’s central bank (SNB) raised its key rate sharply last year to fight inflation, which, in turn, caused mortgage rates to go up as well.
 
The upward trend could continue well into 2023, as the SNB’s chief Thomas Jordan recently said that another hike is likely, further increasing the current interest rate of 1 percent.

READ MORE: Switzerland set for another interest rate hike, central bank chief warns 

This means that mortgages will remain “very expensive, and could well climb further as 2023 progresses,” Moneyland said.

If you already have a fixed-rate mortgage, then you are safe from rate increases for the term of your mortgage.

However, for new home buyers, or those with variable-rate mortgages, things may be more problematic.

“It is not excluded that mortgage interest rates will reach 3 to 4 percent next year,” according to Donato Scognamiglio, director of real estate platform Iazi. 

READ MORE: What’s the outlook for the Swiss property and rental market in 2023?

Are there any cheaper mortgage options in Switzerland?

These articles could help you find alternatives to traditional models:

Reader question: What is a reverse mortgage in Switzerland, and will it benefit me?
 
EXPLAINED: What is Switzerland’s ‘SARON’ mortgage?

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