Germany: Bundesbank Monthly Report: The euro and prices – two years on

In the realm of economic policy, hardly any event has caused such a public stir in Germany and the entire European Union as the introduction of euro banknotes and coins on 1 January 2002. Consumers in virtually every country of the euro area felt that they were experiencing a sharp surge in inflation, and there were growing numbers of press reports on excessive price rises. The official statistics did, in fact, show that prices had gone up in connection with the introduction of euro cash but not nearly to the extent perceived by the general public. Many of the price increases were not connected with the introduction of the euro banknotes and coins but were due instead to other factors, such as very cold winter weather as well as higher taxes on energy, tobacco products and insurance. Nevertheless, there were very noticeable price movements, mainly in the case of some services. Moreover, the pattern of prices had changed, and the diversity of prices had become wider. In the two years following the changeover to the euro, it is noticeable that price structures have, by and large, returned to normal in many sectors. Moreover, some of the excessive prices
that arose at the start of 2002 have since gone down again