WRITTEN QUESTION E-0248/02

by Bartho Pronk (PPE-DE) to the Commission

(6 February 2002)

Subject: Price increases in connection with the introduction of the euro

At the last part-session, Commissioner Solbes stated that prices had not increased as a result of the introduction of the euro. The Dutch media have carried reports of price increases, however, and Consumentenbond, the Dutch consumers' association, has pointed out a number of cases where prices have clearly risen.

Given that price increases as a result of the euro's introduction are a totally unwelcome development, will the Commission provide answers to the following questions:

1. Is it aware of the findings of Consumentenbond's Europrijzenmonitor? Does it acknowledge that the 2,8 % price increase that occurred at about the time the euro was introduced is an unwelcome development? Does it have findings from similar surveys in other Member States? Do the findings of the Consumentenbond survey change Commissioner Solbes' opinion?

2. Can Commissioner Solbes produce statistics to support his statement that the introduction of the euro has not resulted in price increases?

3. The only way consumers can carry out a price survey is to compare prices. It was agreed that, until 1 July 2002, the price of a product must be shown in both old and new currencies. The same survey by Consumentenbond revealed that this was happening in the case of only 48 % of products, with prices being shown in euro only for 46 % of products and in guilders

only for 2 % of products. How is the Commission planning to combat this undesirable trend? Will it remind the Netherlands government of the importance of indicating prices in both old and new currencies in the interests of consumer protection?

4. Among other things, parking charges in the Netherlands have risen by an average of 8,8 %. They are usually set by municipal authorities, and hence indirectly by the Netherlands government. Is the Commission prepared to impress upon the Netherlands government that this increase in parking charges is undesirable?

5. What measures will the Commission adopt if it should find that, contrary to the agreed policy, prices have increased as a result of the euro's introduction?

Answer given by Mr Solbes Mira on behalf of the Commission

(21 March 2002)

The Commission would like to clarify that in his speech before the Parliament on 16 January 2002 in Strasbourg, the Member of the Commission responsible for Economic and Financial Affairs reported that there had not been evidence for significant systematic price increases as a result of the changeover to the euro.

The Member of the Commission did not thus exclude price increases in respect to individual cases or products. Marked price increases in a number of cases reported in the media, in the Netherlands and elsewhere, though unwelcome and potentially unjustifiable as such, are often accompanied with decreases in the prices of other products. They do not seem as yet to lead to a significant and thus detectable overall euro-effect.

The Member's statement was strengthened with the flash-estimate for euro-zone inflation for January 2002 published by Eurostat on 1 February 2002. The euro-zone annual rate for January 2002 is 2,7 %, up from a revised 2,0 % in December 2001. The month-on-month change in the euro-zone HICP (Harmonised Index of Consumer Prices) from December 2001 to January 2002 was 0,5 %. The euro changeover effect on the month-on-month increase in the euro-zone HICP between December 2001 and January 2002 most likely falls within the range of 0,0 % to 0,16 %. Non-euro factors in particular bad weather resulting in very large increases in vegetable prices and some significant tax increases on tobacco can, according to initial analyses, explain as much as 0,34 % of the change. The remaining price increase is thus estimated at most at 0,16 %.

The Commission is aware of the study by the Nederlandse Consumentenbond and other studies in the euro-zone dealing with the issue of potential changeover effects. Many of them rely on data collected before the changeover and most of them can be said to be anecdotal, in the sense that the number and the relative importance of the surveyed products are not representative of the change in the overall level of prices. The Dutch HICP month-to-month change of 1,1 % for January 2002 released by Statistics Netherlands (CBS) on 9 February 2002 seems to confirm this view.

The Commission would like to assure the Honourable Member that the first priority for Eurostat is to ensure that changeover inflation is correctly captured by the HICP. That is that changeover effects cannot be hidden by the calculations and statistical adjustments, even if their impact cannot be isolated as such.

It seems needless to stress that Community markets are free and the economy too dynamic to be able to say what prices would have been if the changeover had not taken place. The euro changeover is but one of many factors contributing to price change. In theory, one would be able to quantify changeover inflation where it exists, and break it down by source. In practice, the most that can be done is to assess the situation on the basis of informed assumptions. Such assessments carry the risk of attributing price changes to the euro changeover when they may be due to other factors. The study of the Nederlandse Consumentenbond which was at the origin of the written question is also subject to these limitations.

The direct comparison of prices over time is indeed the means by which consumers primarily assess price movements. The Commission recommended the dual display of prices in October 2000. Since then, this has been very widely applied, either by law (it is compulsory in Greece, Austria and Portugal) or de facto (large distribution networks, for example, systematically display the two prices throughout the eurozone).

The Commission asked the participating Member States to convert public-sector charges to the euro in a manner which was neutral or to the benefit of taxpayers, and they agreed to this request. As regards parking charges, CBS confirmed an increase in parking charges of 8,4 % in the January 2002 HICP. In general, the prices for the sub-index in question have been increasing much faster than the Dutch all-items index since 1998 and most of the price increases typically take place in January.

Legislation exists in some Member States (e.g: Luxembourg or Austria) allowing action to be taken against excessive price increases. The Commission and especially the European Central Bank (ECB), which was assigned the objective of ensuring price stability by the EC Treaty, will monitor the trend in inflation very closely.