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Friday, 31 May, 2002, 10:24 GMT 11:24 UK
Germany probes euro rip-off
A euro vending machine in Germany
Germans are confronted with some extraordinary price rises
The German government is taking retailers to task following a flood of complaints that many shops and restaurants took advantage of the euro changeover to bump up prices.

Consumer affairs minister Renate Kuenast has said she plans to use a specially-convened meeting with retail and trade groups later on Friday to push for "a return to fair prices."

The move reflects rising popular discontent over a jump in the price of consumer staples such as bread, dry cleaning services and restaurant meals since the switch to the euro.

Outraged by price increases of up to 100% for some everyday items, consumer groups have dubbed the single currency the 'teuro' - a play on the German word 'teuer,' or expensive.

Inflation mystery

Germany's mass-circulation tabloid Bild has tapped into the public mood, launching a consumer hotline and appointing a "Teuro Sheriff" to investigate the most serious cases of euro-related price rises.

Political leaders were slow to respond to consumer protests at first, partly because the alleged price increases have not been reflected in official inflation statistics.

Last week, official figures showed that German inflation fell to a three-year low of 1.2% in May.

And the European Union statistical office Eurostat said on Friday that inflation for the eurozone as a whole fell to an annual rate of 2% in May, from 2.4% in April.

Economists said higher prices for everyday purchases had been more than offset by a fall in the price of big-ticket items such as computers and video recorders.

It has also been suggested that resentment over higher prices may have led consumers to rein in their spending, jeopardising Germany's fragile economic recovery.

Political support

But the campaign received a boost earlier this month when German finance minister Hans Eichel, angered at being overcharged for a lunchtime sandwich, called for a consumer boycott of businesses which had cashed in on the currency switch.

And last week, the European Central Bank's chief economist Otmar Issing said that the introduction of euro notes and coins had been 'misused' to increase prices.

Consumers in other eurozone countries, notably the Netherlands and Ireland, have also reported higher prices in the wake of the euro launch.

Eurostat estimates that the currency changeover boosted the eurozone inflation rate by about 0.16%.

But the issue has become particularly prominent in Germany.

This is partly because the exchange rate between the euro and the old German mark of about two to one makes price increases easy to spot in Germany.

And with elections looming later this year, political leaders are increasingly helping to keep the alleged euro rip-off in the headlines.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Patrick Bartlett
"Bread is one item, whose price consumers complain has soared"
Monika Duerrer, German Retail Federation
"The retail sector is not the one to blame"

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