This is how Switzerland manages to contain inflation

In the context of current global food price growth, Switzerland emerges as a striking exception, resisting the inflationary pressures that are affecting many nations around the world.
Despite the high costs of food in the Alpine country, its economy appears to be remarkably immune to price escalation.
But what is the secret behind this Swiss resistance? 1.
Cost structure Swiss prices, which include wages and logistics costs, act as a protective barrier against global price fluctuations.
In Switzerland, where a significant share of the retail price covers logistics, storage and wages, the impact of price fluctuations is relatively small compared to other nations.
This is attributable to the fact that, in general, price levels in Switzerland are higher, attenuating the effects of changes in the prices of basic goods.
Price regulation Another key factor in the Swiss resistance to food price inflation is government price regulation.
More than 25% of consumer goods in the basket used to calculate inflation are subject to price regulation.
This level of price control, the highest in Europe, means that the cost of many items is not completely determined by simple market supply and demand.
Dynamic import duties Switzerland operates a dynamic import duty system, closely linked to national production levels.
This strategy is of particular importance for agricultural imports, helping to stabilize global market prices.
In times of plenty, high tariffs are imposed to protect against price fluctuations; conversely, when global prices rise, tariffs are revised downwards.
Energy efficiency in agriculture The way Switzerland manages energy consumption in agriculture has a direct impact on food costs.
With energy playing a crucial role from cultivation to transportation and processing, Switzerland maintains a significantly lower share of energy consumption in agriculture than the OECD average.
The unique structure of the Swiss energy market, characterized by electricity suppliers that produce in-house or purchase at low cost through long-term agreements, helps keep energy prices stable.
All this had a direct impact on prices.
During 2022, Switzerland showed a moderate annual inflation rate, coming in at 2.8%, significantly lower than the 9.2% seen in the European Union.
The latter represents the highest value ever recorded, even triple compared to the inflation rate of 2021.
In Switzerland, in the same period, there was an average increase of 4% in the costs related to food and non-alcoholic drinks, while in In the European Union this increase was 11.9%.
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Author: Hermes A.I.

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