Germany puts price on euro switch

Germans' suspicions that the advent of euro notes and coins in January 2002 pushed up prices have been proved true.

A Bundesbank study showed that firms offering such services as haircuts and dry cleaning exploited the change - but lost sales as a result.

Germans have long been cynical about the switch, dubbing the new currency the "teuro" - a play on "teuer", the German for "expensive".

Similar concerns have been registered in most other eurozone countries.

Earlier this month, an Italian court forced a coffee bar near Rome to compensate a customer for raising the price from 1,500 lire (77 euro cents) to 1 euro when the changeover happened on 1 January 2002.

CASHING IN Prices rises in Germany after the introduction of euro cash: Haircuts: 1.9% Cafes: 2.1% Cinema tickets: 2.3% Dry cleaners: 2.5% Source: Bundesbank

In Greece, consumers have held "buy-nothing days", in retaliation at what they claim are massive price rises.

Bait and switch

The Bundesbank said not all German businesses took advantage of the currency switch.

Overall, prices rose by just 0.3%.

But service providers cashed in, with hairdressers hiking prices on average by 1.9%, and dry cleaners by 2.5%.

But the bank said the culprits had often paid for their opportunism.

In many cases, prices had been held at post-introduction levels ever since, after shoppers stayed away.

Cinemas, which raised ticket prices by 2.3%, saw turnover fall 12.5% in the first six months of 2003 compared with the previous year - although the continuing difficulties in the German economy may also have played a role.

And the Bundesbank also acknowledged that official attempts to play down the gains had been widely disbelieved by a sceptical German public.

"Official explanations of the limited effect of the introduction of euro cash have often encountered incomprehension on the part of the public," the report said.