BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Thursday, 27 December, 2001, 10:51 GMT
Euro fuels price rise fears
Oversized euro notes in the euro-village Brussels
Concern regarding overpricing
By BBC business reporter, Mark Gregory

A recent survey by the European Commission suggested that up to two thirds of shoppers in the euro-currency zone expect prices to rise as a result of the transition from national currencies to euro notes and coins.

But what is likely to happen to the prices paid by consumers after the new cash becomes legal tender in 12 West European countries on 1 January?

There is certainly a deep concern among consumers in the eurozone that shops and others businesses will use the arrival of unfamiliar cash as an opportunity to push up their prices.

Anecdotal evidence suggests that some of the fears are justified.

For example, record shops in Holland have reported a big increase in the wholesale price of music CDs and digital video discs linked the euro, which they claim has forced them to increase prices for consumers.

Precedents

Earlier in the year, Unilever, the Anglo-Dutch food and toiletries giant, admitted to raising prices charged for some products ahead of the introduction of euro cash.

The evidence of previous currency changeovers is mixed.

In France, prices actually fell slightly after old francs were replaced with new higher value francs in 1958.

However, in Britain, prices rose an average of 2% following decimalisation of the coinage in the early 1970s.

It was unclear, though, that the currency change was the key cause of this rise as the changeover took place at time of generally high inflation.

Consumer protection

Some European single currency zone governments are going to great lengths to ensure consumers do not get overcharged with the arrival of euro cash.

In France, a team of 200 officials, with powers to reverse unjustified price rises, will monitor the cost of thousands of products for several months

Meanwhile, some shops and other businesses have raised concerns about the extra costs they will incur as a result of introducing the euro.

Typically, big firms have said that adapting their accounting and computer systems to euro transactions is costing the equivalent about 0.5% of annual sales, much of which they have already spent with the arrival of the euro for non-cash transactions in 1999.

The relative burden on small shops and businesses from the change to euro notes and coins may be much higher, especially in areas where profit margins are narrow.


Key stories

Background

AUDIO VIDEO

FORUM

FACT FILES

INTERACTIVE QUIZ

SPECIAL REPORT

TALKING POINT
Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes