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Friday, 31 May, 2002, 14:27 GMT 15:27 UK
Germany's euro unease
Fresh juice booth in Frankfurt rail station
Euro enthusiasm faded as retailers raised prices

Germany's Consumer Affair Minister Renate Kuenast is having crisis talks with representatives of the retailing, catering and service industries in a bid to prevent mounting popular concern over euro profiteering damaging the economic recovery and the standing of the government.

Despite the fact that the official inflation rate was just 1.2% in May, the lowest level since December 1999, many consumers say they have spotted huge price hikes on specific items.

The currency has now been dubbed the "teuro", a play on words linking the word "euro" with the word "teur", meaning expensive.

The teuro sheriff

The tabloid Bild newspaper has captured the public mood, forcing the issue on the agenda by appointing its own "Teuro Sheriff".

It has continued to headline the worst abuses. Official figures have recorded instances of prices jumping as much as 51% on tomatoes, and 33% on cabbages.

There are reports of other food items climbing substantially.

Retailers themselves blame bad weather conditions. Dr Katarine Andre of the German Retailers Association denied that there members were cashing in.

"We don't see any serious problem" she said, "the consumer could always chose not to buy over-priced goods."

But she admitted consumers were suspicions of the euro and that had prompted what she called a "strong economic crisis in the retail sector" .

That is bad news for a government desperately trying to talk up economic confidence in election year.

Suspicious consumers

Carel Mohn of the Federal Consumers Association said they had recorded individual cases of the deutschmark prices being transferred into euros at rate of one to one, effectively doubling prices.

He blames the Government for taking a "hands-off" approach.

"They said the market would regulate everything and we are now seeing that the market does not regulate everything," he pointed out.

He called for more transparency but admitted that consumer perceptions were also partly to blame.

To simplify the currency swap, consumers were told to multiply by two to see the euro price in the old currency.

In reality the exchange rate was 1.955. Add to that a tendency to round prices up instead of down and problem took off.

The official inflation statistics are based on a basket of some 750 items but it is weighted towards monthly payments for rent and utilities, which have fallen.

The price of larger one-off items such as video recorders and computers have also dropped in price.

But its the price of a cappuccino that people notice.

Consumers groups say they will aim to build confidence by publishing a positive list of retailers who are sticking to the rules.

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 ON THIS STORY
The BBC's Sonali Gudka
"Consumer groups in Germany have been inundated with complaints about traders using the switch to raise prices"

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