Europeans See New Legal Tender as Leaving Them Lighter in the Wallet

Lorena Fidati says this year’s switch to using euro coins and notes instead of the lira has triggered sharp price jumps that have devastated her personal budget.

“It’s not just me,” the 29-year-old beautician said. “All my friends also run out of money around the 15th of the month.”

Emiliano Guerra, 30, a public relations employee who buys most of the groceries for his family, is also complaining. “Shopping costs went up 40%,” he said.

Plenty of people feel this way. Yet according to government statistics, inflation in Italy has run at about 2.2% for the last year.

This is roughly average for the 12-country euro zone, with analysts saying the changeover has caused up to one-quarter of the increase in prices. That pins blame on the new European common currency for a significant portion of inflation, but it’s not in the same league as the wallet-crushing disaster that many people say they feel.

Even as governments and many economists generally express satisfaction that the switch has gone smoothly, consumers are crying foul. Many people believe that prices have not only been rounded up but that merchants have taken advantage of the changeover to try--without much success--to slip price increases past consumers.

“People are not blind. They see that prices have increased--they see it every morning when they do their shopping at the market,” said Carlo Pileri, president of ADOC, an Italian consumer association.

In Germany, angry shoppers have even coined a new word: “teuro,” created from euro and teuer, the German word for “expensive.”

“The teuro makes me furious,” said Elke Luetzenkirch, a customer at Berlin’s KaDeWe department store. She blames euro-related inflation for taking about $150 a month from her wallet and says she’s thinking about selling her car to help make ends meet.

Greece has long gotten by without small coins. The smallest was 20 drachma, and even it was rare, so prices were routinely rounded off to the nearest 50 drachmas, about 14 cents. Euro coins come as small as 1 cent--equal almost exactly to a U.S. penny.

Since the introduction of the euro, supermarket cashiers in Athens have routinely rounded upward to the nearest 10 cents.

“I’m made to feel cheap, but I have to argue when I see the grocer rounding off each item upward as he weighs it, and then rounding upward again when he totals all the items,” said Vasso Pritsa, an Athens homemaker. “In that way he’s making an extra profit on each item and another on the entire purchase.”

A waitress in an Athens cafe that sells coffee rounded up to three euros complained that “they’ve rounded up everything, but they haven’t rounded up our wages.”

Some people tend to believe that prices have increased even when they haven’t. Scholars at Ludwig-Maximilians-University in Munich reported an experiment in which participants were given two menus for a restaurant, one in German marks and one in euros. On the euro menu, some items were slightly more expensive and others slightly cheaper than on the mark menu, but the cost of an average dinner was the same. Of the 2,000 participants, 90% said a dinner would cost more from the euro menu.

Some businesses are trying to fight this psychological effect. In the Berlin suburb of Spandau, Restaurant Kolk stills hands out old menus with the prices only in marks. The switch-over to euros is done when the bill is paid--and it’s calculated with the exact rate of 1.96 marks per euro.

Luigi Campiglio, an economics professor at the Catholic University of Milan, said that another reason for the gap between people’s perceptions and official statistics is that the uneven inflation of the last seven months hits different social groups in different ways.

“Our statistical methods were conceived for an industrial world with standardized goods and rather homogenous prices, while we live in a service economy where diversity is the rule,” Campiglio said. “Diversity applies to the products but also to the people buying the products. It’s increasing the probability that different social groups will experience different inflation rates.”

Campiglio cited a British study in the 1970s showing that inflation rates for retired people and for the general public weren’t significantly different. “I think if we replicated this study today, we would find very different results,” he said. “The lower-income groups should be the most affected.”

In Ireland, where inflation is running at about 4.5%, the main government economic advisory agency, Forfas, did a study on the effect of the euro on consumers. “It shows that there is anecdotal evidence of [euro-related] price increases in some non-trade services like pubs, restaurants, doctors, hairdressers, dentists and opticians,” said Dermot O’Conghaile, who helped prepare the report.

Yolanda Quintana, a spokeswoman for Spain’s Confederation of Housewives, Consumers and Users, said that before the changeover, “we had worried about other things, such as correct change or becoming familiar with the new notes.”

“But surprisingly, the No. 1 complaint is rising prices,” she said. The “everything for 100 pesetas” shops changed to “everything for a euro” shops, a 66% leap, she complained.

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Christian Retzlaff in Berlin, Janet Stobart in London and special correspondent Cristina Mateo Yanguas in Madrid contributed to this report.