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France: Consumer Group Links Steep Price Rises To Euro

France's largest consumer association today published an extensive study of what it describes as extraordinarily steep price rises for everyday household items over the past two years. The consumer group links the price increases to the formal introduction eight months ago of the euro, the European Union's common currency, but French government officials disagree.

Paris, 27 August 2002 (RFE/RL) -- France's biggest consumer association, the Federal Union of Consumers, or UFC, says that the introduction of the euro has pushed up shopping bills for the average French family by some 10 percent over the past two years.

In May and June of this year, the UFC conducted the last of five major studies of the impact of the European Union's single currency on prices since November 2000, surveying about 55,000 items in more than 1,000 major retail outlets.

It found that the cost of some fresh food goods had more than doubled, and that prices for some shampoos, soaps, and other beauty products had increased by 40 percent.

The UFC's findings, published today, conflict with official figures from INSEE, France's National Institute of Statistics and Economic Studies. INSEE reported an annual inflation rate of 1.7 percent for consumer goods in France last year, and recorded price rises of only 0.5 percent between March and June of this year. The UFC says its survey showed increases of 2.63 percent in May and June alone.

Yesterday, France's junior minister for commerce, Renaud Dutreil, said he "readily admitted" that certain prices had gone up. But he added that "to say that the euro has engendered an inflationary spiral would constitute a [logical] step which seems to me imprudent to take."

Spokesmen for both the UFC and INSEE agree that the differences in their findings are in no small part due to the different methods employed. The consumer group surveys only everyday household items: largely, food and hygiene and beauty products. INSEE, whose task is to compute France's inflation rate, also takes into account the cost of items such as automobiles, television sets, computers and other electronic devices, and insurance and other similar so-called "one-time" purchase items.

Major distributors and retailers in France -- and other EU countries -- agreed on a moratorium on price rises between November 2000 and the end of March 2001. The purpose was to allay consumer fears of so-called "euro profiteering" in the conversion of national currencies to the common currency in 12 of the EU's 15 member states.

Jean-Paul Geai, the editor of the UFC's respected monthly magazine "Que Choisir" ("What To Choose"), which published the group's study in its current issue, said that the moratorium was largely observed. But Geai told our correspondent: "Based on a study of 55 different items over the past two years, we were able to establish that in general the rises in prices were from 8 to 10 percent. For some products, we even registered increases as high as 20 or 25 percent. That's particularly true of some brands of sausages and some beauty products, where the rise was from 15 to 20 percent, or more. That's enormous because there are very few [other] factors that can justify such increases. It's not the cost [of] the labor involved, nor the cost of raw materials. So we have the impression that some industry people or some distributors took advantage of the arrival of the euro either to round off the price -- they were always rounded off upwards -- or to impose [so-called] 'psychological' prices, which also led to rises."

In French retail commerce, a psychological price would sell a product for, say, 5.98 euros, when the price is, in effect, 6 euros.

UFC President Marie-Jones Nicoli alleges that some people are being "fooled" into thinking goods are cheaper than they really are. She said: "They think that prices of 1 or 2 or 3 euros are cheap. But when they get home and calculate the prices in old francs, they find they're not cheap at all."

"Que Choisir" editor Geai said that based on the UFC's contacts with similar national consumer associations in the EU-wide Bureau of Consumer Unions, he believes all euro-zone countries have apparently experienced similar price rises. He said he knows this to be a fact in Italy and Spain, whose consumer groups maintain close contact with the UFC.

INSEE contests the UFC's findings, even in the limited areas covered by the consumer group's study: food and other everyday items. Baudouin Seys, who heads INSEE's department dealing with consumer prices, told RFE/RL: "Our findings do not match the results of the study conducted by the Federal Union of Consumers. For example, their study examines prices between the months of March and June [of this year, and posit a price rise of 2.63 percent]. Our findings, on the other hand, show a rise of [only] 0.5 percent [for the same goods] during the four months from March through June."

The contrast between INSEE's and the UFC's estimates of price rises in newspaper coverage yesterday and today made thought-provoking late-August reading for the French, who are awaiting next month's annual "return" to normal political, as well as educational and cultural, life.

Several media commentators said yesterday the controversy could serve to reduce the popularity of the conservative government led by Jean-Pierre Raffarin. So far, Raffarin's four-month-old government has had relatively high popularity ratings.

The commentators note that the UFC findings reflect sentiments felt by many, but far from all, French consumers in the past 18 to 24 months, feelings particularly acute since the end of the price-rise moratorium on 1 April.

They believe that with France's most important consumer group now corroborating those feelings, Raffarin may be in for trouble unless he takes measures to halt the apparently excessive price rises due in large part, according to the UFC at least, to the introduction of the euro.