I remember, back in 1997 when I was still living in Germany and planning a trip to the UK, that the exchange rate from the “Deutsche Mark (DM)” to the “Great British Pound (GBP)” was 3:1.
So 1 Mark bought me 30 pence!
And, I remember that when the price for a “normal” roll went up to 32 Pfennings, e.g. 10 pence, my parents were devastated. That was very expensive for a roll.
scary roll
Now, for the last few days when I buy rolls it crosses my mind that the rolls here are about the same “number”, e.g. 32-39 pence which makes it about 100 pence, a price increase of round about 300%.
Unfortunately, the Euro now is so strong that for argument sake 39 pence are about 49 Euro cent. If we assume that the Euro was 1:2 to the DM we are back to 1 DM for a roll these days.
Not sure how the inflation developed in the last 10 years. If we assume about 4% on average over 10 years, we would end up with (if I did it right) about 51 Pfennings for a role, e.g. 25 cents or about 28-19 pence.
This still means a price increase of 100%, e.g. I pay double the price for a roll in the UK than I pay in Germany. Of course I do not know how much you pay for a “Broetchen” these days in Germany – please advise and comment! The only reference I found is a year old, 25 cents, locally even 15 cents! That sounds about right.
I am looking forward to some comments on “how much should a roll cost” and “why are rolls more expensive in the UK than in German”? Any other experience of roll prices?
For all economists out there and those who are interested in CPI etc., see Wikipedia for details.
Enjoy your lunch 
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#1 by big brother on August 24, 2008 - 16:51
Well, 4% inflation is a tad on the high side, though it would only increase the rolls from 32 pf to 47 pf over 10 years. More likely inflation was around 3%, which translates to a 32% price increase over 10 years.
What you are seeing is something else I believe. First, UK prices were always higher than German ones, different countries, different prices. That’s why economists like to compare living standards and incomes at PPP (purchase power parity) – google the Economist’s Burger Index for a simple measure. Second, the pound has fallen dramatically against the Euro – from 1.5 to 1.25, that is about 15% (hurts me on my savings). So any comparison against the Euro is pointless as such currency fluctuations don’t immediately translate into rising prices.
Lastly, just to get scared, take the 3% inflation and project it over 30 years – you get a price increase of approx. 242%, so everything gets about 3.5 times as expensive. Or, the other way round, your savings will be worth less than a third of what they are now – then, think retirement.