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Daily goods cost more, and shoppers blame euro
Frankfurt, 2002-09-14 (International Herald Tribune)
By Mark Landler (The New York Times)

Emmanuele Piccari marched in front of the Italian Parliament to protest rising prices for everyday products, increases that he believes are a result of the introduction of the euro in January. But his actions were more rebellious than his words.

"I didn't buy anything," said Piccari, who is an office worker in Rome. "Not even a coffee or a cappuccino."

Shoppers in Italy staged a nationwide strike Thursday against merchants, who many consumers say have exploited the transition to a common European currency by marking up the price of everything from pasta to haircuts. Consumer groups in Greece called on shoppers there to refrain from buying fruit and vegetables next week.

These are the latest ripples in a wave of anger that has swept across the Continent since euro notes and coins became legal tender in 12 European countries in January, replacing lire, marks, francs and so on. That so much anger persists nine months later, in the face of statistics that show Europe has relatively low inflation, has left officials at the European Central Bank a bit flummoxed. They fear that the inflation-mongering euro could become a sort of urban legend, stubbornly persisting in public perception regardless of facts that contradict it.

"The effects of the changeover are over," the bank's president, Wim Duisenberg, said Thursday.

"It's crucial that this perceived rate of inflation not get entrenched in people's mind-set."

Duisenberg said there had been a onetime jump in the prices of some things like cups of coffee or meals in restaurants, because merchants converting their old national-currency prices to euros tended to round them upward. He said people had mistakenly inferred from these isolated cases that inflation is rampant.

"It's not against the euro," Duisenberg said of the outcry, "but the euro is perhaps the scapegoat."

Certainly, blaming the euro has become a political sport throughout Europe. In an interview last week with the Milan newspaper Corriere della Serra, Italy's prime minister, Silvio Berlusconi, said his mother had complained to him about how the euro was driving up prices.

Berlusconi, the richest man in Italy, said, "When I have to buy something important, I think twice now."

In fact, economists say, the prices of big-ticket items like cars and kitchen appliances have not risen unusually. Over time, they say, the euro may bring their prices down, by making it easy to compare prices across borders.

It is the little things that have gone up. Consumer groups have gathered a laundry list of examples. It costs 48 percent more to have a pair of trousers dry-cleaned in Germany than it did last year. A visit to the hairdresser in the Netherlands is 5.7 percent more expensive. A lunch of yogurt, potato chips and tea in Ireland costs 8.7 percent more. A pack of cigarettes in Greece is 6.4 percent higher. Elken Lindquist, a physician, was picking through peaches at a supermarket in Frankfurt the other day. She used to buy them from a fruit seller but stopped this year after the price shot up. "Everything you need for daily life is so expensive," Lindquist said, noting that she now buys fewer luxuries like CDs.

Annie Chagnon, a grocer in Paris, allows some of her customers to buy provisions on credit. As she has raised prices, more people have started to pile up unpaid balances. "I think the euro is partly responsible," Chagnon said. "Everything has gone up. Even lottery tickets have gone up."

Such claims are not backed up by the data compiled by Eurostat, the Luxembourg-based agency that crunches numbers for the European Union. It says inflation in the 12 euro countries is running at 1.9 percent a year, slower than the 2.6 percent rate a year ago.

The European Central Bank decided on Thursday to hold its main interest rate steady at 3.25 percent – in part, Duisenberg said, because there did not appear to be a threat of inflation.

Inflation is highest in Ireland, at 4.2 percent, and lowest here in Germany, at 1 percent. Yet Germans have taken to calling the euro the "teuro," a play on the German word for expensive.

The discrepancy in perception, economists say, has to do with the way inflation statistics are calculated. The numbers are a weighted average of the price of goods and services, with the weight determined by the share of household income that goes toward buying each item.

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