Currency faces ultimate test of bargain hunters

French have shrugged off 700 years of the franc with surprising ease but complaints persist about price inflation
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The Independent Online

France faces its ultimate test in its conversion to the euro today, when the delayed January sales open in shops across the country. With stores besieged by bargain hunters and all goods marked in three prices – old price in francs, old price in euros, new price in euros – a successful first day of the sales would crown the apparent triumph of the new currency in France.

France faces its ultimate test in its conversion to the euro today, when the delayed January sales open in shops across the country. With stores besieged by bargain hunters and all goods marked in three prices – old price in francs, old price in euros, new price in euros – a successful first day of the sales would crown the apparent triumph of the new currency in France.

After one week of the euro, nearly all French people have been pleased and somewhat surprised by the ease with which they have shrugged off 700 years of the franc. More than half of cash transactions last weekend, the first big shopping period, were conducted in the euro. In recent opinion polls, between 72 and 88 per cent of French people say they have been impressed by the smoothness of the transition.

In the French countryside – ahead of the towns, also surprisingly – the franc is already well on the way to vanishing point, long before the 17 February deadline. But some cracks have appeared in the varnish of self-satisfaction.

There have been hundreds of complaints of price-gouging by shops and restaurants that have converted the franc to the euro with a generous extra margin for themselves. Overall, the government insists most French retail businesses have done the sums fairly and there should be no substantial euro-impact on inflation this month.

But consumers' organisations and the government price-watch offices in each departement (county) have been flooded with complaints about individual abuses.

The other main problem, now easing, has been a shortage of euro change and euro notes, blamed by the government on the banks and by the banks on the government.

The problem arose partly because French consumers failed to act as they were supposed to. They were expected to change their large denomination franc notes in the banks and spend their remaining small change in the shops. Many did the opposite: buying newspapers or loaves of bread with Fr500 (£50) notes and queuing in banks with a few franc notes or bottles of five centime (half-penny) pieces. Because of that, much of the "float" of euro change given to the shops was soaked up in the first couple of days.

The banks compounded the problem by reneging on a commitment to change up to Fr2,000 for allcomers. Many branches refused to change francs for non-customers unless they opened an account.

France has a tradition of suspicion of banks. This was a Brussels-sent opportunity for the banks to impress people who normally avoid them. The banks fluffed it. When criticised by the government, the banks retorted that they had no choice but to ration their service, favouring regular customers, because they had not been given enough euros by the French central bank.

By yesterday, just in time for the sales, the squabble seemed to have abated. Shops had been restocked with change and the first flush of panic by people without bank accounts desperate to change their children's – and their own – piggy banks into euros had died down.

The storm over euro pricing may take longer to abate. The government insists that, with some prices rounded up and others rounded down, the impact on inflation this month should be minimal. In the medium term, the Finance Ministry says, the single currency should have a deflationary effect on prices across Europe.

Broadly speaking, most prices have been converted fairly. Parisian bakeries now charge €0.69 for a baguette, for instance, which is almost an exact conversion of the previous price of Fr4.50. All the main supermarket chains have been competing for custom by reducing prices across the board.

But the price-watch magazine 60 Millions de Consommateurs has been inundated with complaints. Lionel Maugain, a journalist at the magazine, said: "Most of the protests – and we are talking about real price hikes, not just rounding up – seem to concern restaurants, drinks machines, motorway tolls and works canteens."

One abuse unearthed by the publication concerns a direct recommendation by the Nestlé food company in a brochure distributed to retailers. It recommends that its confectionery – Smarties, Lion, Kit-kat, Crunchie – should now be sold at €0.85 (Fr5.58), instead of the previous price of Fr5 (€0.76). "Your till will smile," the Nestlé brochure says.

Finance Ministry officials said that all apparent abuses would be investigated but said there was no sign of a systematic increase in prices.

An official said: "In the relatively short term, normal competition between businesses should bring unwarranted increases in line. It is partly up to the consumers themselves to watch out for those shops and restaurants which are abusing them and go elsewhere."

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