Edit: Thank you all for the answers.
In: 803
No, but goods have different prices, and sometimes costs.
If you make olive oil in Italy and sell it in Germany, they price won’t be the same in both places. The shipping to Germany has to be added in the German stores, and that’s more than local Itallian delivery.
When the cost of fuel goes up, the cost of transportation goes up and prices go up. In the US, transportation cost, due to government oil policy changes, is the largest driver for inflation. Wages are second.
Inflation rate is based on what you can buy with a given amount of currency (or, equivalently, how much cost a given item).
For example, if in NY a pint of beer went from 6$ to 8$, that’s a 33% inflation rate on beer in NY. If, meanwhile, it went from 6$ to 9$ in SF, that’s a 50% inflation rate on beer in SF. Even if they both use the same currency.
“THE inflation rate” is based on a selected cart of items that represents basically how much all the prices of stuff you need (incl. rent, utilities, gas, food, etc.) got higher. Since prices are and change differently in different places, inflation can be different even if everyone involved uses the same currency.
There should be a common market, but there is legal and geographical friction. If minimum wage goes up or VAT increases this will affect inflation only in the specific country. Also NB Eurozone =/= EU.
Not all EU countries use Euros.
The UK (prior to leaving), Scandinavia, Poland and a several other easten European countries don’t use the Euro.
In total its only 19 out of 27 EU countries that use euros.
Europe is also large with varied terrain, making wine in france is easy to get around most of france but to get to lets say the north of Poland it has to travel for a few days, which is taken into account for costs due to it being an import now.
The countries also have different industries, a country that manufactures less cars for example will have a much smaller income from that alone, which effects their local economy and pricing.
Similar to how different US states have different item costs, transport isn’t cheap and the climate/land is different which limits industries in various ways.
For the same reason why different states in the United States have different inflation rates. Inflation hits different areas in different ways. The cost of living is dependant on the area in which you live and the availability of goods and resources. You have to transport fruits and vegetables to a major city, for example, and the rise in transportation costs are going to affect the costs of the fruits and vegetables. Meanwhile, the rural areas aren’t going to be affected by those transportation costs, because the fruit and vegetables are readily available since they’re locally grown. Therefore their costs don’t go up, and they’ll have a lower inflation rate as a result.
The money is the same. The local prices for things aren’t.
an Euro in Estonia is worth the same as an Euro in France.
All euros minted or printed anywhere in the Eurozone are legal tender in any other part of it. The coins may have different stuff on the backside, but otherwise they are all equal.
What isn’t the same across the continent is how much a job pays, how much rent is and how much buying goods and services cost you.
In some places the price of some things increases faster than in others.
Just because they use the same currency doesn’t mean that prices are the same… a loaf of bread might have been €2 and is now €2.10, in Germany maybe it went from €2 to €2.20. That’s 5% vs. 10% increase — could be due to higher labor costs, higher costs of wheat in one country vs. the other a large bakery not being able to get parts to repair their commecial oven and decreasing supply, etc.
Let’s say Apple has an amazing year, pays all employees big bonuses, and a lot of people in the Bay Are willing to spend more money to go out to a bar and grab a beer with some locally source avocado on artisan bread.
People in the Bay Area can’t really drive to Montana or Louisiana to grab a beer (and they have no locally sourced avocado at all!) so the Apple employees’ willingness to pay more only affects the prices at bars in the Bay Area.
Another thing to consider is that different rates of inflation (and price levels in general) are typically underlying indicators of how well certain regions operate under the same currency.
These different price levels aren’t necessarily a *good* thing. Economically speaking, there’s a strong argument that Spain, Italy, Portugal and most of Eastern Europe should operate on one currency, and France, Germany, Netherlands, etc on another. But politically that’s infeasible. Also German exports under this system has made them filthy rich.
Just like (technically) manufacturers in coastal states in the US benefit in their exports being dollar denominated, and manufacturers in the interior of the country are hurt (because the dollar exchange rate is going to be an average of the economic activity of the whole, and lay somewhere in between the natural rate for the two regions).
Let’s say you live next to a tomato farm and want to buy a pound of tomatoes. It costs 10 money units, because the farmer can just hand it to you. Now let’s say you live at the top of a small mountain with a difficult path. The farmer needs to pay for a cart and horse and make a tremendous effort to get up the mountain to sell you a pound of tomatoes, he of course wants additional compensation for his trouble so charges you 20 money units for the same tomatoes someone bought for only 10 who lives close by.
Now let’s say a landslide made the path up the mountain much more dangerous. The farmer doesn’t want to cross it for only 20 moneys but the people in the mountain town really need tomatoes so are willing to pay 40 moneys for their pound of tomatoes. The farmer is now willing to make the trip and charge 40.
Person who lives at the bottom has seen no inflation. Town on the mountain has seen 100% inflation. Its the same currency its just where you are effects your purchasing power
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