Up and down – again and again?

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Some prices are tied to a so-called index. The index is actually a mirror of the typical spending of a certain group – be it companies or us consumers. Such a connection can be useful, since indices make price movements more predictable. But: the medal has another side.

For example, if prices are linked to the wrong index, prices may rise or fall without any connection to the company’s actual cost situation. For example, one might ask: Should radio and television prices go up if the prices of meat and vacuum cleaners go up? Food and household appliances are included in the national consumer price index (CPI), and on this basis radio and television charges are also adjusted for inflation.

The example of an elevator service and maintenance company illustrates another annoying problem: the said elevator company voluntarily linked its service prices to the SWISSMEM wage index. This index measures price developments in the Swiss engineering, electrical and metal industries and is based on price developments for certain goods and services. This seems appropriate at first glance and has not raised objections so far. But this year, the elevator company sees things differently, with the SWISSMEM index up “only” 1.01% in 2023, not enough for it to trade. Therefore, it was decided without further ado to raise the prices for services by almost three times (!). Acceptance of the index anchor: “Sometimes you win, sometimes you lose” becomes: “Either I win, or I win.” As a customer, you have an extraordinary right to terminate the contract, but there is no formal enforcement in Switzerland. I can only act as an intermediary for the many affected here and contact the company, which I did.

Issues become especially sensitive when the prices of products included in the index rise. Because such an increase in prices can cause a whole chain reaction: for example, the prices of telecommunications are included in the national consumer price index. If telecommunications providers raise prices now, this will affect the index. If it rises, then all the prices associated with it will also rise and, in addition, will serve as an argument for many other companies to raise prices. In other words: this way you can start an upward price spiral. That is why I am concerned about current developments in the telecommunications sector and expect companies to recognize their responsibility.

What can people do to protect themselves? In most cases, the answer is quite trivial: use your choice! Before entering into a contract for a long period of time, read the terms and conditions of termination. I follow cases where you have no choice, for example with government rates. There I often speak in the form of recommendations that I actively use.

Source: Blick