December 1, 2001
Currency Change Frustrates European Consumers
By EDMUND L. ANDREWS
RANKFURT, Germany, Nov. 30 — One month before euros become the new common currency in 12 European countries, the great price shuffle is in full swing, and consumers are not amused.
Back in June, the price for a pair of disposable contact lenses at the Apollo Optik outlet in Cologne was 21.90 marks. After the store developed a new price list in euros, which will start replacing marks on Jan. 1, the price jumped almost 15 percent.
At 12.69 euros, the price looks lower at first glance but translates to an increase of three marks (about $1.35). "Our suppliers have raised their prices to us, so we had to raise our prices as well," said Ditta Zeisberger, who manages one of the Cologne outlets.
Price increases for everything from groceries and cosmetics to carwashes and dry cleaning appear tied to the euro changeover. The increases are too scattered to push up overall inflation, but they have heightened mistrust about the euro at precisely the moment European leaders are begging their sometimes reluctant people to embrace the new currency.
"We don't believe it is a real problem for inflation," said Anne Millot, who monitors euro issues for Union Fédérale des Consommateurs, a national association of French consumer groups. "But when consumers see higher prices for the bottle of water they buy every day, or the bread they buy, they become very angry. And that could make them very unhappy with the euro itself."
The euro is supposed to be a great benefit to consumers, encouraging greater competition by making it easier to compare prices between different countries and fostering even easier commerce. But at least in the short term it has made it easier for companies to raise prices.
Lego's Life on Mars, which sold for 64.95 marks at toy stores here in April, was repriced a month later at 34.99 euros — also an increase of more than three marks. Shampoo that once sold for 8.49 marks was repriced at 4.49 euros, about 3.4 percent higher.
"The trend has been quite continuous," said Rainer Wezel, director of the Institute for Consumer Research, a research group in Cologne that has been monitoring prices for about 1,000 goods and services. "We found that toy prices went up in the summer, perhaps when they would not attract much attention, and now we are seeing increases in services like carwashes and restaurants."
Many if not most of the increases are tied to "rounding up," the attempt by retailers to set euro prices that end in customer-enticing numbers like 95 or 99. But consumers are annoyed rather than lured.
"We mark down exactly what we spend every week on groceries, and it is about 5 percent higher than it used to be," said Rolf Münch, a civil servant who was shopping with his wife, Monica, at the Real supermarket in a suburb outside Frankfurt. "Milk used to be 1.09 or 1.19 marks, and now it is 1.20 or 1.30. Light bulbs are more expensive too."
Retailers in Germany and many other European countries have promised at least to round down as much as they round up. But consumer groups and some economists say companies began raising prices pre- emptively as early as last spring.
In France, where retailers pledged to refrain from any price increases between Nov. 1 and the end of next March, consumer groups reported widespread increases for grocery goods in September and October.
In Germany, the Institute for Consumer Research spotted price increases on about 10 percent of the products it monitored between April and July. Of those, it concluded that the vast majority were at least related to the euro, because the new prices in marks no longer ended in the usual 95 or 99 beloved of retailers.
A sudden jump of almost 5 percent in the price of chocolate milk drew the attention of Germany's Federal Statistics Office, which weighed in with a bafflingly thorough analysis that concluded that euro pricing accounted for only 11 percent of the price increase.
In Belgium, the Economic Inspection Authority has monitored thousands of products and concluded that people used europricing "to implement price increases they might have been planning for later on," said Fernand van Gansbeke, the authority's director.
Store owners and small retailers protest their innocence, arguing that they do not have the power to push through hidden price increases.
"A bakery works with pennies, and if we raised the price of something by a full mark we would lose the customers," said Giorgios Kouvatas, who manages the Backstube corner bakery outlet in downtown Frankfurt.
Mr. Kouvatas said most prices had shifted 5 to 10 pfennigs (2 to 4.5 cents) since he introduced euro prices in September. But changes have gone both ways, he said: cheese rolls jumped to 2.15 marks from 2.10 marks, but croissants dropped to 1.56 marks from 1.65.
Store owners are indeed under pressure, not only because customers suspect hidden price increases, but from the sheer practical headaches of the weeks that will follow "E-day" on Jan. 1.
"Studies show that customers are really worried about not knowing how to calculate the prices," said Michel Paillard, a spokesman for Auchan, the French supermarket chain. "The second worry was that they were going to get cheated, and the third worry was that they are not going to be able to check their change."
Auchan and most other retailers are girding for major stress and confusion as people unload their remaining marks or francs or lira at stores rather than banks.
Stores are required to accept the old currencies until the end of February, but are expected to give change only in euros. Millions of cash registers and millions upon millions of coin-deposit grocery carts must be reprogrammed or replaced.
Auchan is putting its 16,000 store employees through a 10-hour course to teach them how to handle the two currencies, to spot counterfeit euros and to soothe customers who discover they that cannot pay with checks denominated in French francs.
By most accounts, the logistical preparations seem on track.
But the transition to euro prices is more difficult. In Belgium, a survey in September by Test-Achats, a consumer research organization, found that about one-quarter of all products and services did not have euro prices. Of those that did, 13 percent had been miscalculated.
"As we get ready for the euro, we want to create a climate of confidence for consumers, but this is not helping confidence at all," said Ivo Mechles, a spokesman for Test- Achats.
Test-Achats found the biggest euro-related price increases at movie theaters, swimming pools and small hotels and calculated an average 2 percent for increases it found.
But businesses are not the only ones changing prices. The German government recently set new euro prices for issuing documents like birth or marriage certificates. The new prices take hold on Jan. 1, and some will be 17 percent higher than the old ones.