The euro turns 20: have prices really increased with the single currency?

It’s an idea that comes up every year: prices have exploded with the euro. Nearly 80% of French people are convinced of this, their purchasing power has collapsed since his arrival, reports a YouGov survey for MoneyVox. But is it a reality? Today, 19 European countries have used the single currency, including France for 20 years now.

Indeed, prices have increased, assures Michel Ruimy, economist and professor at Science Po on LCI. “When we change currency, there are always upward adjustments. And if today, we return to the French franc, there would be these same adjustments,” he nuances. But if there was a rise in prices, “there was no acceleration of it”, continues the economist.

According to INSEE figures, the cost of products has increased by 1.2% on average each year since 2002. A level considered moderate, if we look at that between the post-war period and the 1980s (+10 , 1%) or even between 1986 and 2001 (+ 2.1%).

In this sense, inflation after the changeover to the euro “was not atypical”, notes INSEE, which even notes an impact of “the order of + 0.1% to + 0.2% on prices”. But then, why this feeling of a surge with the euro?

What the researcher points to is the difference between measuring and perceiving inflation. To calculate the latter, several parameters must be taken into account: food, clothing, transport, etc. Gold, “households are more sensitive to changes in the products they buy frequently”, advances the economist. Other manufactured goods, less expensive, but less prized, do not receive the attention. Thus, between 2001 and 2021, the 34% increase in the price of the baguette has an impact of more than “the decline of cars or computers in recent years”, explains Michel Ruimy.

“These are the first (daily purchases Editor’s note) which constitute a threat to the balance of the budget” of households, supports INSEE. It should also be remembered that consumers compose their own baskets according to their own budget structure.

Another possible explanation for this mistrust: “the changeover to the euro has resulted in prices often rounded up to the next higher unit”, underlines Michel Ruimy. However, if the prices of products have been revalued, their increase over the past 20 years is not that significant. Take the example of the baguette. According to INSEE data, before the euro, it cost 0.66 euro. After, 0.68 euros, against 90 cents today. When you look at 500 grams of pasta: 0.73 euros in 2001, 0.75 euros in 2002. And for 250 grams of extra fine butter: 1.47 euros in 2001 and 1.5 euros the following year.

In short, there was no explosion in prices with the arrival of the single currency. But other factors come into play: soaring energy or commodity prices. Even if it falls under “improvements to be made”, the professor of Science Po underlines “an overall positive result” euro for 20 years.