Euro Leads to Price Increases

The introduction of the Euro in January will lead to price rises. With this assessment, German financial market experts confirm the expectations of critical consumers.

These are the findings of a current study conducted by the Centre for European Economic Research (ZEW) in Mannheim. Around 300 experts from banks, insurances and industrial sectors participated in the survey, which was carried out in October. The results are unequivocal: With 68 per cent, more than two thirds of the experts expect that the brave new euro world will start off with an inflation effect.

However, there is no reason for serious concern. The extent of the price effect is expected to be rather small. Only three per cent of all surveyed experts expect a substantial increase in the inflation rate, while the majority predicts merely a moderate increase in prices. Due to the current rapid decrease of the heating oil and gasoline prices, the chances of price stability for next year are not as bad after all, according to the experts. At least 58 per cent of respondents expect that the rather small stimulus provided by the euro will not push inflation to more than two per cent.

For further information please contact

Dr. Friedrich Heinemann, Phone: +49(0)621/1235-149, E-mail: heinemann@zew.de