Europe's Gouging Gap.(Brief Article)

The food strikes didn't make an impression. Neither did the cappuccino boycotts. It wasn't until Rosa Berlusconi told her son, Silvio, that pasta prices had trebled since the euro's launch that the Italian prime minister took action. To combat Italy's fast-rising prices, Silvio Berlusconi is calling for a three-month freeze on electric, gas and postal prices. Italians share Signora Berlusconi's outrage. No matter that ISTAT, Italy's official statistician, says inflation is actually lower than last year. Italian consumer confidence is the lowest in three years.

The euro may have been created to unite Europe, but 10 months after its birth, the currency has split the Continent. Whether angered by a 3 euro cup of coffee in Greece or a 1.50 euro can of soda in Spain, consumers are furious and blame the new currency. The Jan. 1 introduction of euro notes led many merchants to round prices off, which almost always means up. French gourmands saw some meat and dairy prices rise 30 percent. The resulting rifts have pitted livid consumers against shopkeepers, and exposed anew the institutional divide between the north and the poorer south of Europe, where the price-gouging seems most rampant, and painful.

With lower average wages, older populations and more retirees on fixed incomes, southern societies are more vulnerable to so-called Euro- inflation. They're also less well prepared to fight it. Across southern Europe, more than half the population is self-employed, which means the merchants and shopkeepers among them can set their own prices. Nations like Greece and Portugal lack the watchdog agencies that guard consumers in the north. (The Finns, for example, deployed inspectors earlier this year to help shoppers figure prices and count change in euros.) Writing in the Greek newspaper Eleftherotypia, political columnist Victor Neta complained, "Greek society was found disorganized and weak in the face of the mad rush to capitalism that the European Union brought."

An equally wide gap has opened between public perception and the view from Brussels, where officials say inflation is only a tenth of a percent above the target rate of 2 percent. Tell that to the Dutch radio station that broadcasts a daily "hall of shame" of price gougers. As early as this spring, German consumers were calling the euro the "teuro"--a play on the German word for expensive. According to a recent consumer-group study, a German ...