How can eu countries have different inflation rates when they all use euros? Do euro have different value in each country?

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Edit: Thank you all for the answers.

In: 803

Answer 1

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).