Monday, December 17, 2007

STOP TIPPING SO MUCH! Spain's Economy Minister says Spanish public doesn't know the value of a euro


At 4.1%, Spain's inflation rate is currently higher than other euro zone countries. Economy Minister Pedro Solbes apparently believes that part of the reason for this is the failure of Spaniards to understand the value of the euro.
.
At an economic forum held on Saturday he said, "We Spaniards haven't internalized the value of a euro, which can be seen in bars and cafes. When people leave tips, they don't take into account that 20 cents is worth 32 pesetas and that one euro is worth 166 pesetas. They often leave a tip that's 50% the value of the product."
.
Before the euro replaced the peseta in 2002, Spaniards were in the habit of leaving 25 peseta tips in cafes, which would have equaled somewhere between 10 and 15 cents.
.
While Solbes added that he believes inflation will return to below 3% before next March, he admitted that he was wrong when he said some years ago that the euro had not had an inflationary effect as a result of merchants rounding up prices at the time of the conversion from the peseta.
.
"When I was in Brussels (as the EU Economic Affairs Commissioner), I said the opposite, but now I can say that the euro has had an inflationary effect on low cost items."
.
So, why should we now believe his predictions about inflation? ¡¿?!

No comments: