July 2008

for

How the Swiss consider inflation:perceptions and expectations

Ifop for Robeco (Switzerland) Ldt

2

Context & method1

3

Context

The return of inflation:

Tense inflationary situation in SwitzerlandPrices continued to rise at 2.9% in May and in June

(the highest rate for nearly 15 years)

What knowledge, perception and expectations do the Swiss have with regard to inflation?

4

Study conducted for: Robeco (Switzerland) Ldt

Sample: 954 individuals aged between 18 and 75 and representative of the Swiss populationSample representativeness ensured by random selection.

Collection method: Interviews took place by telephone at the home of the respondents.

Field dates: 11 to 17 July 2008.

Methodology notes

5

Study results2

6

Measures to counter inflation are one of the main priorities for the Swiss

30%

21%

18%

11%

9%

6%

5%

53%

44%

34%

20%

19%

14%

13%

Fight unemployment

Ensure pension financing

Fight against inflation

Help make companies more

competitive

Help household consumption

Reduce the budget deficit of some

towns / cantons

Counter the weak Swiss franc

First item mentionedOverall items mentioned

Question : In your opinion, what priority action should the authorities take regarding the economy?

Below 25 years of age (59%) Employee, worker (59%) Fewer than 2,000 inhab (60%) Living in the West Plateau (60%) Below CHF 4000 (64%)

Below CHF 4000 (50%) 35 to 44 years old (50%)

Executive employee (29%)

French-speaking Swiss (43%) 65 or more years of age (42%) Executive employee (54%)

With regard to the economy, measures against unemployment, financing pensions and measures to deal with inflation are the main requests made by the Swiss to the authorities.

7

A rate of inflation perceived as relatively close to the official statistics

10%

22%

17%

5%

4%

10%

6%

3%

1%

58%5% and under

Below 2%

Between 2 & 2.5%

Between 2.6 & 3%

Between 3.1 & 4%

Between 4.1 & 5%

Over 5%

Between 5.1 & 10%

Between 10.1 & 20%

Over 20%

Question : In your opinion, what has been the inflation rate in Switzerland in the last twelve months?

Official data*

2.9 %

(*) Price variations May 2007-May 2008 according to the Federal Statistics Office

The sudden return of inflation in Switzerland since the start of the year after over 15 years of stability, arising in part from rising oil and food prices, did not escape the Swiss’ notice. 39% of them also referred to a relatively accurate view of the current inflation rate and estimated it as between 2% and 3%. It should, however, be noted that 32% were unable to estimate the inflation rate.

8

The universally shared feeling that prices are rising and already a certainty that they will continue to do so in the

year to come

Question: In your opinion, in the last year have prices in Switzerland risen, fallen or stayed the same?

92%

1%

7%

Risen

Fallen

Stayed the

same J uly 2008

Question : In your opinion, will the rise in inflation continue in the next twelve months?

46%

43%

8%

1%

9%

89%TOTAL Yes

Yes, certainly

Yes, probably

TOTAL No

No, probably not

No, certainly not

J uly 2008

Over CHF 9500 (57%) Under 2000 inhab (59%)

The feeling that prices are rising is shared by almost all respondents. The feeling that prices will continue to rise in the months to come is broadly shared (89%).

Base : persons stating that prices had risen in the last twelve months, i.e. 92% of the sample

9

In sum, the feeling that the phenomenon is a long-term one is shared by nearly two thirds of the Swiss

60%

36%

4%

Structural

and long-

lasting

Temporary

and

dependent

on the

situation

No answer

provided

Question : And would you say the price hike, inflation, will be…

Base : persons stating that prices had risen in the last twelve months, i.e. 92% of the sample

Question: In your opinion, for the last year prices in Switzerland have risen, fallen or stayed the same?

92%

1%

7%

Risen

Fallen

Stayed the

same J uly 2008

Under 35 (65%) Employees, workers (66%) Living in French-speaking

Switzerland (74%)

65 and older (45%) East plateau (44%)

The majority of the Swiss see inflation as a structural phenomenon on a long-term basis in the Swiss economy.

10

21%

13%

8%

4%

7%

9%

5%

3%

1%

53%5% and under

Less than 2%

Between 2 & 2.5%

from 2.6 to 3%

Between 3.1 & 4%

From 4.1 to 5%

Over 5%

From 5.1 to 10%

From 10.1 to 20%

Over 20%

Expectations of a slower pace in price rises in the next twelve months

Question: How much will it increase by in the next twelve months? Can you give me a percentage between 0.1% and 100%?

Expectations of price increases are, however, relatively low and below 2.5% for 34% of respondents.

11

The feeling that prices have risen concentrates on oil, food, real estate and leisure

68%

63%

27%

19%

18%

3%

7%

6%

14%

11%

47%

1%

12%

23%

59%

43%

61%

28%

10%

8%

99%

84%

15%

4%

14%

24%

10%

10%

1%

11%

Petrol

Foodstuffs

Real estate

Leisure

Clothing

Household consumergoods

Cultural products

High-technologyproducts

Risen Fallen Stayed the same No answer given“Prices have…”

French-speaking Switzerland (93%)

French-speaking Switzerland (79%) Under 35 (73%)

Respondents almost unanimously made a distinction between petrol and food as being the most ‘inflationary’. These were then followed by real estate and leisure whose perceived increase in the last year is significant. The inhabitants of French-speaking Switzerland were the most sensitive to price rises irrespective of the product tested.

French-speaking Switzerland (75%) 35-44 (72%)

French-speaking Switzerland (30%)

French-speaking Switzerland (29%)

French-speaking Switzerland (21%)

12

22%

15%

13%

11%

4%

3%

53%

43%

34%

30%

24%

8%

6%

3%

32%Dairy produce

Bread and cereals

Meat

Vegetables

Fruit

Fish and seafood

Coffee, tea and cocao

Sugar, biscuits and ice cream

First mentioned

Total references

Perception of inflation in food produce focuses on dairy products and cereals

Question: Among the following foodstuffs, which has risen in price the most in the last twelve months?

East plateau (59%)

35-44 (50%) French-speaking Switzerland (49%) Under CHF 4000 (53%)

The perceived price rise focuses primarily on basic foodstuffs: dairy produce and cereals. The first position of dairy produce in public opinion can probably be explained by the very recent media coverage of strikes by dairy works in June 2008 and the ensuing increase in milk prices to support them over and beyond the actual increase in the price of some products such as butter in particular.

Base : persons stating that the price of foodstuffs had risen in the last twelve months, i.e., 84% of the sample

13

An anxiety-provoking rise in inflation impacts the purchasing power of the Swiss and their subsequent behaviour…

Question : And would you say about the rise in inflation and in prices that it…

The impact of inflation on purchasing power is clear for 77% of respondents and consequently fed concerns leading them to wait for the authorities to address the issue.At the same time, the observation of the idea that inflation could have a positive effect accounted for a tiny number of respondents.

Base : persons stating that prices had risen in the last twelve months, i.e. 92% of the sample

43%

37%

36%

25%

11%

34%

34%

35%

17%

15%

13%

23%

26%

36%

7%

10%

13%

28%

1%

8%

1%

31%

8%

8%

has an impact on your purchasingpower

Must become a priority action for thegovernment

worries you

will change your behaviour

May have beneficial effects for theeconomy

Yes, entirely Yes, rather No, rather not No, not at all No answer provided

71%

67%

28%

60%

77%

14

9%

64%

25%

2%

More

Less

As much

No answer J uly 2008

Question : And would you say that the increase in inflation and prices…

25% 35% 26% 13% 1%will change yourbehaviour

Yes, entirely Yes, rather No, rather not No, not at all No answer provided

41%

18%

34%

7%

More

Less

As much

No answer J uly 2008

Save

Question: You said the price increases would change your behaviour. Do you intend to…

Spend

Base : persons stating that the price increase would change their behaviour, i.e. 60% of the sample

An increase in prices has a direct impact on saving and consumer behaviour in Switzerland

The increase in inflation tends to modify the majority of behaviours in Switzerland: 64% of them stated they intended to spend less and at the same time save more (41%).

Base : persons stating that prices had risen in the last twelve months, i.e., 92% of the sample

15

Minor concerns about the impact of inflation on personal investments

Question: With regard to the impact of inflation on your investments, would you say that you are concerned or unconcerned?

Base : persons holding financial products, i.e. 88% of the sample

17% 28% 31% 6%18% july 2008

Entirely concerned Rather concerned Rather unconcerned Entirely unconcerned No answer

45% from 6501 to 7800 CHF (55%) 55-64 years of age (62%)

In this context, the attitude of holders of financial products are currently varied and divided between optimism and anxiety. Although 45% stated concerns about the impact of inflation on their investments, 49% were relatively confident.

49%

16

A far from insignificant proportion of Swiss citizens would be ready to direct savings to other types of investment…

Question: And in the event that inflation rates exceeded the yield of savings products or life insurance, would you consider directing your savings toward other types of investment?

19%

25%

29%

19%

8%

48%

44%TOTAL yes

Yes, certainly

Yes, probably

TOTAL no

No, probably not

No, certainly not

No answer

Base : persons with financial products, i.e. 88% of the sample

Under 25 years of age (50%) East Plateau (50%) University, ETH, polytechnic(53%)

compulsory schooling (58%) 65 and over (61%)

The rise in inflation does not necessarily result in investment diversification. Nevertheless, 44% of respondents are considering redirecting their savings toward other types of more profitable investments. It should be noted that this trend increases with education and income levels.

17

… dominated by financial investments and real estate

Question : What other types of investment?(open question – unprompted answers)

Base : persons with financial products and considering redirecting their savings to other types of investment, i.e. 44% of the sample

14%

6%

3%

15%

39%

23%Equities / Bonds / Funds

Real estate

Savings account

Saving without investment

Other investments

Don't know yet, will follow advice

of banker

Under 4000 CHF (34%) 65 or older (35%)

Over 9500 CHF (25%)

Compulsory schooling (19%) From 4001 to 6000 CHF (20%)

Stock market investments and other bonds and investment funds seem the most frequently considered alternative for Swiss citizens wishing to diversify their investments ahead of real estate acquisitions. Responses also highlight the central role occupied by banks in directing the decisions of their clients.