"Cucumbers Have Gone Through The Roof," Thanks to Euro
January 23, 2002
"Cucumbers have gone through the roof", says Sebastian, a regular shopper at Kaisers supermarket in Berlin. "And the Zucchini too – 2 euro each – they used to be just 99 pfennig". Almost four times less.
The anecdotal evidence is plentiful. Prices on a range of products have increased in Germany, according to the Federal Association for Consumer Affairs.
"The psychological effects of changing prices from their old thresholds of, say, 4.99 to a new price of 2.56, often leads to price rises", says Karin Kuchelmeister of the Federal Association for Consumer Protection.
"Every third product on offer has gone up", Kuchelmeister says.
The figures are most extreme in the service industry, where prices have risen by two-thirds in some cases. "Our service line hasn’t stopped ringing", says Kuchelmeister. "People have phoned in to complain about the fact that the cost of getting their hair cut has gone up 30 percent, or that the dry cleaning bill has doubled", she says.
Sensitive to the fact that the public might associate higher prices with the changeover, eurozone government ministers did not blame the euro, but rather taxes, rents and energy costs as the main culprits.
But many economists, including the chief economist at Germany’s Bundesbank, Hermann Remsperger, have acknowledged that the changeover to the euro has led to higher prices. He expects inflation to exceed 3 percent this year.
The daily tabloid Bild Zeitung not surprisingly ran a headline on Wednesday sounding the alarm on rising beer prices – up by 7.5 percent. The outrage is mounting.
Price transparency
Advocates of the single currency have argued that a major benefit of the euro is that it will highlight price differences for the same products over the 12 euro countries - and eventually wipe them out.
But the Herald Tribune newspaper, explaining New Year's price hikes that will see its cost per paper to 1.85 euros at French news stands, but 2.30 euros in Austria, said existing national market and cost variations meant that prices could not be standardised.
"The difference in prices relates to two things - to the differing costs of production and distribution, and to historical differences in markets (for pricing)," Managing Editor Robert McCartney told Reuters.
By contrast, competitors like the Wall Street Journal Europe and the Financial Times retailed on Wednesday at the standard euro-zone prices of 2.20 and 2.25 euros respectively.
Most retailers are at pains to combat rip-off claims. But the impact of the new currency on prices is only slowly emerging. Normally, the German Federal Statistics Office would be able to estimate the rise in prices.
But it does not plan to release its official monthly inflation figures until Jan. 31 – a week later than usual, because of the difficulties of comparing prices of some 400,000 goods and services between Deutschmarks and the new currency.