Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
In Ireland the experience of conversion to the Euro led to some temporary griping about shops rounding up prices.  This is not surprising.  Pricing strategies are heavily geared towards "natural" price points like 99c., 1.99, 4.99 etc.  Manufacturers frequently hide price rises by reducing package size or some such.

But overall this led to a small temprary blib in inflation stats which was amplified in popular media with "price gouging" stories of a few high visibility incidents or items.

What really caused inflation over the longer term was a boom caused by very low interest rates, irresponsible fiscal and banking policies, and a shortage of supply to meet the very rapid spike in demand for key items like, development land, commercial buildings, and prestige private housing. For a while everyone - including foreign tourists - went along, because it took a while for popular relaisation that prices had gotten way out of line with the rest of the Eurozone to sink in and lead to concrete action.  And then we had an almighty bust amplified by world economic factors over which we had no control - and now a very painful readjustment.

But there is no rocket science about all this.  Smaller peripheral economies can buck overall eurozone inflation stats only for a while and then prices - and businesses made possible by them - have to revert to something closer to what the economy can bear.  Sheltered (often public) or highly innovative or advanced sectors of the economy can busk this trend for far longer if their productivity or first mover advantage or political position allows.

notes from no w here

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Feb 15th, 2010 at 07:38:37 AM EST
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