Consumers comfortable but not happy with the euro

Most people in the Balearics are now accustomed and comfortable with the euro - but not the prices. The Eurotelefon hot line set up by the local government in the middle of December to provide information for people with doubts and queries is starting to ring less and less. Between January 22 and 25, operators handled just 64 calls, 66 per cent less than during the previous week. However, despite the drop in callers, the vast majority of people dialling 900 166 000 are doing so to complain about the price hikes because of the “rounding up” process. The complaints are however nothing new, price increases have been the predominant complaint and concern of consumers since the start of the year. There are also still a number of shops failing to price their goods in the dual currencies, pesetas and euros, as required by law until February 28. But, the latest study by the Confederation of Balearic Business Associations has discovered that more people in the Balearics are using only the euro than in any other community in Spain and that it is in fourth place when it comes to change being returned in the new single currency. But while consumer anger over price hikes grows, the authorities, keen to see the euro work as quickly as possible to silence the doubters and critics, are turning a blind eye. Fears of rising prices across Europe as retailers cash in on the change to the euro have been confounded, according to the head of the European Central Bank. “There has been little evidence so far of the changeover affecting the average level of prices,” he told an audience of financial journalists in Frankfurt, “ Inflation should stay safely below the 2% annual maximum the ECB has set itself throughout 2002 and “for the foreseeable future”, he said. “And we do not expect any noticeable effect on the average price level in the future.” And Mr Duisenberg reiterated his sunny prognosis for the economy in the 12-nation euro area, predicting a modest recovery in 2002 after a subdued first few months of the year. “There are indications pointing to a gradual economic recovery in the euro area in the course of this year... signalled by financial market developments and by recent survey data, which indicate that the decline in confidence in the euro area may have bottomed out.” Mr Duisenberg chided both the public and the media for hunting out any and every hint that shopkeepers could have used the switch to the euro as an excuse to round up prices and hike their margins. “There is a lot of talk by the public and the media about the potential inflation effects stemming from the rounding towards psychologically attractive prices,” Mr Duisenberg said. “But we should expect such rounding to be in both directions, up and down.” The continuing high levels of competition in retail would see to that, he said.