INFLATION: It's Worse in Europe

  • Share
  • Read Later

Americans who complain about the high cost of living can take some solace by looking at Western Europe. There, prices are rising almost twice as fast as in the U.S. Like a pernicious plague, inflation infests the whole Continent; it is damaging living standards and shaking governments. The annual rate of rise so far this year averages 6% in the Common Market, and in Spain is leaping at an incredible rate of 1% a month. The cost of food is particularly oppressive. Parmesan cheese is up 17% in Italy, beef has risen 19% in The Netherlands, potatoes have jumped 50% in France.

Because many Europeans have had their life's savings wiped out in past catastrophic inflations, they are especially sensitive to the perils of rising prices. They are all too well aware that when a country dilutes its currency by spending and borrowing irresponsibly, honest enterprise wanes. Profiteering and tax evasion become the rule, social goals are unattainable, and the country ultimately becomes unmanageable. Europe's inflation is not nearly that acute, but it is causing deep political and social unrest.

— In Germany, inflation runs at an annual rate of 5.5% and is the prime issue in the campaign for next month's federal election. The country is pulling out of a recent economic slowdown, and Chancellor Willy Brandt is eager to avoid any price controls or other restraints that might impede the recovery.

> In Britain, where prices have been climbing at a 6% rate this year, inflation is a major reason that support for the Conservative government has dipped to a new low for the year in the polls (39% of the people say that they support the Tories, while 50% are for Labor). Last week Prime Minister Edward Heath proposed a voluntary $4.84-a-week pay-raise limit for all British workers for at least a year; he also asked for a 4% ceiling on price increases for manufactured goods. The proposals have yet to be approved by unenthusiastic unions and businessmen.

— In The Netherlands, prices are rising at an annual average of 7%. The government resigned last June after failing to check prices, and it scheduled an election for next month. Two weeks ago the interim government proposed a voluntary 9% ceiling on wage increases and a 5% limit on prices. Businessmen will go along only if the government cuts its spending, while the unions' price for agreement includes strict government controls on prices along with more and better public housing and social services. Agreement is unlikely.

In Italy, the 5.6% rate of inflation led to rioting after the government attempted to hold down food costs in Rome by putting controls on many retail food prices—but exempted wholesale prices. Shopkeepers closed their businesses and battled with wholesalers in the streets. The government has lately agreed to let the Italian retailers' association fix the limits on price increases and post them in member shops or street stalls. But wholesale prices are still exempt, and they keep going up.

  1. Previous Page
  2. 1
  3. 2