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Old 07.08.2011, 10:07
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Why aren't prices falling...?

So, with the huge rise of the CHF and the drop of interest rates, why aren't prices falling...?

The big benefit of a rising currency is usualy that imports get cheaper.

True, there is often a lag as inventories bought at a higher price are used up. But, the CHF has been going up for some time now.

So why aren't gas (petrol) prices falling...? The prices of oil has been falling and it is denominated in US$.

Why isn't the price of imported food dropping? Perishable items should drop almost as soon as the currency drops since there is an inventory of only a few days.

Why haven't the banks reduced their variable mortgage rates to "near zero" to use the SNB's term, even with their spread? Or just dropped them?

Anyone out there noticed prices dropping and I'm just not noticing..?

Are you seeing price drops in your grocer or local gas station...? Has your mortgage rate dropped?

Are there differences in regions...? Have prices dropped where you live?

Will we see drops coming later..?
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Old 07.08.2011, 10:14
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Re: Why aren't prices falling...?

Many exporters and importers agree fixed prices in SFr at the beginning of a year (or more)... sometimes one loses and the other gains during that period.

There will be a degree of profiteering but retailers close to the border will soon realise they will have to do something.

The cost of raw goods and products in the EU and UK is often just a small amount of the the total retail cost. Transport, wages, rent and all the other business overheads are still paid in SFr

There will be a slight dropping of retail prices but it may take a while to filter through, and it will only be a small percentage in comparison to the drop in the value of the pound and Euro (see my third point above)
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Old 07.08.2011, 10:18
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Re: Why aren't prices falling...?

What incentive is there for anyone to lower prices? People are used to paying them, so why voluntarily take less profit when people will continue to buy?

Switzerland is not a competitive economy. Period. As it was before, you go to McDonald's in Germany and eat for half price. You could buy groceries for half price. The Coop/Migros duopoly does little to push down prices. Further, Swiss salaries have not dropped, which means a major of chunk of their expenses, unaffected by the Euro, have not dropped.

With fuel, you MIGHT see it sooner, but those companies have long perfected the art of opportunistic pricing. but, otherwise, you shouldn't hold out for things getting cheaper in Switzerland. Actually, repeat that clause a few times: "things getting cheaper in Switzerland." doesn't it just SOUND weird?!
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Old 07.08.2011, 10:44
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Re: Why aren't prices falling...?

Coop/Migros have alot of local overhead costs, like building rental/ownership, employee wages, etc. which are all in CHF. A favorable/unfavorable exchange rate is for sure a factor, but maybe not as big as we might expect it to be. Gas price is mostly taxes.

If prices of consumer goods don't drop locally, we can still exercise our stronger CHF by buying more things abroad, either by driving over the border or via mail-order. The once expensive shipping costs in Euros just got alot cheaper
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Old 07.08.2011, 10:48
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Re: Why aren't prices falling...?

There wasd an article in the Sonntagszeitung this morning saying how angry Migros is getting at importers for not adjusting their prices and that they want the government to take action.
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Old 07.08.2011, 15:41
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Re: Why aren't prices falling...?

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There wasd an article in the Sonntagszeitung this morning saying how angry Migros is getting at importers for not adjusting their prices and that they want the government to take action.
Migros. Yeah, right. Maybe they should start with the pricing of their own store-brand products.

E.g. Migros' subsidiary Mibelle produces shower gel for the German "dm" drugstore chain. The product is sold at 0.65 or 0.85 per 300 ml unit.
Very similar products from the same factory sold at Migros ("I am" store brand) contain 250 ml only but cost between CHF 2.40 and 2.60. Go figure.
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Old 07.08.2011, 15:50
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Re: Why aren't prices falling...?

Fuel won't drop much (and it has gone down recently) as 80% of the pump price is taxes.

Tom
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Old 07.08.2011, 15:53
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Re: Why aren't prices falling...?

Doesn't cost more to put that 'M' on so many products ?
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Old 07.08.2011, 16:00
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Re: Why aren't prices falling...?

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So, with the huge rise of the CHF and the drop of interest rates, why aren't prices falling...?

The big benefit of a rising currency is usualy that imports get cheaper.

True, there is often a lag as inventories bought at a higher price are used up. But, the CHF has been going up for some time now.

So why aren't gas (petrol) prices falling...? The prices of oil has been falling and it is denominated in US$.

Why isn't the price of imported food dropping? Perishable items should drop almost as soon as the currency drops since there is an inventory of only a few days.

Why haven't the banks reduced their variable mortgage rates to "near zero" to use the SNB's term, even with their spread? Or just dropped them?

Anyone out there noticed prices dropping and I'm just not noticing..?

Are you seeing price drops in your grocer or local gas station...? Has your mortgage rate dropped?

Are there differences in regions...? Have prices dropped where you live?

Will we see drops coming later..?
Not everyone sees it in the same light:

http://www.swissinfo.ch/eng/specials...l?cid=30718160

[report is about 3 wks. old]

And just this past Thursday (4 Aug), there were reports that the Nationalbank were planning to create more currency to pump into the economy to cause inflation and weaken the value of the CHF, which in time may cause interest rates to go up --- not down --- in the long term - although, there may be small short-term reduction.

http://www.swissinfo.ch/eng/Home/Arc...l?cid=30822990

Related reports here:

http://www.swissinfo.ch/eng/specials...l?cid=28856262
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Old 07.08.2011, 16:09
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Re: Why aren't prices falling...?

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Fuel won't drop much (and it has gone down recently) as 80% of the pump price is taxes.

Tom
The tax on one liter of 95 Benzin is 73.12 Rappen. Fuel is around 101 Rappen

The tax on one liter of Diesel is 75.87 Rappen.

The current 95 Benzin price is a total of Sfr 1.74 in Bern. So the fuel price is around SFR 1.01

http://de.wikipedia.org/wiki/Mineral...teuer_(Schweiz)

http://www.tanktipp.ch/

Last edited by Ittigen; 07.08.2011 at 17:04.
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Old 07.08.2011, 16:16
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Re: Why aren't prices falling...?

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So, with the huge rise of the CHF and the drop of interest rates, why aren't prices falling...?
- lack of competition meaning that reduced costs are not being passed on to the consumer but instead adding to profit margins
- willingness of the swiss consumer to bear the prices
- loose monetary policy by the SNB which will stoke inflation and balances out the rise in CHF and may cause prices to actually rise
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Old 07.08.2011, 16:20
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Re: Why aren't prices falling...?

A major problem here is the Swiss mentality: "If anything is cheap it can't be good"

Here we have a major steady change, over many months, and Coop and Migros bleating in the Media that the wholesalers have not reduced their prices. What happened to the theory beloved of professors that the markets will set the price! Why can't the Swiss retailers force the wholesalers to pass on the reductions?

For the past four years, I have been shopping first in Aldi, and then if I cannot find what I am looking for, I go to the next Coop or Migros. I have saved thousands of francs! I recommend you all try and do the same.

Almost all Aldi food comes from Switzerland or Germany. Most of the hardware sold is "Made in the EU" which means it might be manufactured in China, but packaged and sold from the EU.
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Old 07.08.2011, 16:42
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Re: Why aren't prices falling...?

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Why can't the Swiss retailers force the wholesalers to pass on the reductions?
As long as enough Swiss consumers are willing to pay inflated prices and as long as retailers don't (or can't) stop selling overpriced import products they simply lack the bargaining power.
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Old 07.08.2011, 17:29
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Re: Why aren't prices falling...?

I've been also shopping like Ittigen and noticed this: a year ago, my local Aldi was always empty, maybe 2-3 people shopping. Now, I sometimes actually have to wait in line. So definitely people are starting to take notice. That said, the Aldi crowd here is about 1/10 of the crowd that can be seen in Migros or Coop which are about 50m away.
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Old 07.08.2011, 22:39
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Re: Why aren't prices falling...?

Tonight we ate some cooked lamb fillet. It was Australian, very tender and tasted delicious.

I paid CHF 35,-- per Kilo, from the Aldi deep freeze. Why pay more?

Last edited by Ittigen; 08.08.2011 at 00:27. Reason: cooked! Idiot remark
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Old 07.08.2011, 23:19
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Re: Why aren't prices falling...?

I have no idea where do you guys buy petrol, but PB95 is 1.53 CHF at my local station (in Brugg BE, near Biel). Diesel is 1.58 CHF.

I've also noticed that price of electornics (pc components etc), reflect lower exchange rates almost instantly.
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Old 07.08.2011, 23:20
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Re: Why aren't prices falling...?

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Tonight we ate some lamb fillet. It was Australian, very tender and tasted delicious.

I paid CHF 35,-- per Kilo, from the Aldi deep freeze. Why pay more?
Was it marinated or raw?
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Old 08.08.2011, 00:41
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Re: Why aren't prices falling...?

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I have no idea where do you guys buy petrol, but PB95 is 1.53 CHF at my local station (in Brugg BE, near Biel). Diesel is 1.58 CHF.

I've also noticed that price of electornics (pc components etc), reflect lower exchange rates almost instantly.
Lucky you!

Average prices, Switzerland CHF 1.73 1.79 1.83

http://www.reisen-tcs.ch/travel/de/h...zinpreise.html

Last edited by Ittigen; 08.08.2011 at 22:07.
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Old 08.08.2011, 01:08
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Re: Why aren't prices falling...?

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Most of the hardware sold is "Made in the EU" which means it might be manufactured in China, but packaged and sold from the EU.
Sorry to go OT here for a second, but... is this true?
Just because something is packaged in the EU it can carry a MADE in EU label??

I really wish that everything needed to be clearly labeled here, as they do in the states. It is something I always look for.
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Old 08.08.2011, 10:31
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Re: Why aren't prices falling...?

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Tonight we ate some cooked lamb fillet. It was Australian, very tender and tasted delicious.

I paid CHF 35,-- per Kilo, from the Aldi deep freeze. Why pay more?
Dude, there isn't just one lamb supplier in the whole Switzerland. Furthermore, how can you guarantee that Aldi doesn't close both eyes on quality when it comes to price/contract negotiation ? Germany is the no.1 fattest country in Europe. It has to do with the cheap, low quality food IMO (just like in the US).

I'm not confident on Coop/Migros eather, but obviously, there's less junk food there.
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