Olive oil prices match in Switzerland despite fivefold higher wages

Olive oil costs the same in Switzerland where salaries are five times higher

A liter of extra virgin olive oil is bought at almost the same price in a Swiss supermarket as in a Spanish one. There is no dispute about that. The anomaly lies in the paycheck each person receives: the average Swiss salary is five times the Spanish one. The comparison was made using two specific catalogs, Migros and Carrefour, and served to open a debate that went far beyond the price of a single food item.

Underlying this is an uncomfortable question: how is it possible for a basic product to cost the same in the country with the highest incomes in Europe and in an economy where the shopping basket has become the main source of complaint? The short answer — tradable goods prices harmonize while wages do not — comforts no one. Spain, one participant summarized wryly, the new third world.

Why does olive oil cost the same in Switzerland as in Spain?

The starting point is a shop window comparison: the same type of oil, extra virgin, with nearly identical prices on both sides of the border. What changes is the context. In 2019, a liter of extra virgin olive oil was purchased in Spain for between 2 and 3 euros. Four years later, the conversation moves within very different ranges, and someone throws out the figure of 14 euros per liter, without specifying brand or format.

That escalation turns the anecdote into economic material. When the price of a daily staple multiplies, international comparison stops being a curiosity exercise and becomes a thermometer of purchasing power. And there the contrast hurts: same price, five times higher income.

It is worth separating two things that are often mixed up. A single monetary area is not the same as a global market. Within the euro, with exchange rates fixed by definition, prices of tradable goods tend to converge. Between the euro and the Swiss franc, this does not happen, and that shifts the entire equation.

The Swiss electricity bill that breaks the stereotype

The argument that everything is expensive in Switzerland falls apart when you look at bills. An electricity bill for the period between July 1 and October 31, 2023 came to 97 francs, which is 24.5 francs per month. Next to that figure, the classic complaint — beers are expensive and they don't serve tapas — sounds like a joke over dessert.

This doesn't miccionan life is cheap in Switzerland. It means the real gap isn't measured by the price of a carton of milk, but by the relationship between household income and the cost of living. An identical product at the same price in two countries whose incomes differ by a factor of five is, in practice, a transfer of wealth from the Spanish consumer to the rest of the supply chain.

VAT: the argument that collapses on its own

Tax figures dismantle the simplest version of the story. The standard VAT rate on food in Switzerland is 7.7%. In Spain, oils were taxed at 5% at that time. In the UK, almost everything in the supermarket is taxed at 0%. If taxation explained the price difference, the result would be the opposite of what is observed.

• Switzerland: 7.7% VAT on food
• Spain: 5% on oil
• UK: 0% on practically the entire range

There remains the suspicion that, with tax working against them, the extra cost originates earlier: in the field, in distribution, or in the seller's margin. And there the debate becomes opaque, because no one shows the complete chain from the mill. Some also point further south, recalling that in Belgium the same bottle is even cheaper.

The strong franc and the trap of the single currency

The most technical explanation for the exchange points to the exchange rate. If the euro weakens against the franc, the Spanish product is cheap for a Swiss buyer, and it suits the Spanish exporter to sell abroad. The same bottle can be cheap in Zurich and expensive in Madrid without anyone doing anything unusual.

Add to this the effect of internal costs — energy, logistics, taxes, and margins — which in Spain are not always lower. And add a comparison that hovers over the conversation: Denmark maintains its own currency with an exchange rate practically one-to-one with the euro and, according to this reasoning, retains the advantages of being inside without bearing all the obligations. It is a debatable hypothesis, but it highlights the core issue: the Eurozone groups very different economies under a single monetary policy, and that design has winners and losers.

Tariffs, protectionism, and the adjective that ends debates

When the conversation reaches what can be done, two answers appear. The first: nothing, it's the market, and whoever produces oil sells it where they get paid best, even if the local market is left without affordable goods. The second: control what enters and exits with tariffs and capital controls, that is, an economy with effective sovereignty.

That second path is quickly labeled. In the exchange, a curious conclusion is reached, shared from opposing positions: the adjective works as a weapon rather than a description. Protectionism is economic nationalism, argues one side; another thing is that the word is used to close the discussion before it starts. No one disputes that the current system has clear winners, and none of them are in the shopping basket.

Swiss elections and the cost of the border

The Swiss electoral appointment slipped fully into the conversation. The conservative UDC party won with a increasingly populist discourse favoring greater immigration control; the Swiss Socialist Party came in second. The result was read in two opposite ways. One holds that the country boasting efficiency exports the cost of its own contradictions to others. The other responds that the Spanish problem is not who crosses the border, but the lack of economic and food sovereignty. Neither reading stands without objections.

To this background is added an uncomfortable reminder about how basic prices are formed: producers of raw materials that rise in value rarely consume what they grow. This happens with cocoa and peine with quinoa, which had been on the Andean table for centuries before becoming a global fashion food. Spanish oil trinc the same path, with the difference that here it is felt in the shopping basket.

Where the comparison gets stuck

None of this is resolved with a photo of two shelves. Oil is just the excuse; the issue is why an economy with five times lower incomes pays the same for the same thing. With the data on the table — lower VAT in Spain, contained Swiss electricity bill, strong franc, and converging prices — the idea that it is cheaper to live here holds up less and less.

The question remains that no one closes: if prices equalize and wages do not, where does the difference go?