Hard job for euro bargain hunters

Single currency: Analysts claim that lower prices are on the way - but the high street is slow on the uptake

BUY YOUR French car in Germany and your chart-topping British CD in Italy. Cross- Channel day-trippers have compared prices for years but retailers are only slowly making plans to mark goods in euros.

The single currency will become the bargain hunter's best friend even before it is in our pockets. But retailers have been given three years' grace before all items are required to be marked in euros.

There is confusion among retailers and a lack of interest among shoppers. "We shall not be marking items in euros in the near future,'' said a spokesman for the Stockmann department store in Helsinki. ``We shall mark all our goods in euros and the Finnish mark soon," said his colleague.

At the Karstadt department store in Bonn, the shop manager, Breit Graf, said: "Since Saturday we've printed the totals on our receipts in deutsch- marks and euros. We have printed some 50,000 receipts but few customers have remarked on it. We are disappointed." At Galeries Lafayette in Paris, receipts are also in euros and francs but a spokeswoman said: "We have no date for dual pricing. It will happen gradually."

Even though the euro will not be in consumers' pockets until 1 January 2002 - with old currencies being withdrawn in participating countries on 30 June of that year - it is already clear the currency will lead to greater competition. Indeed, the European Union is running a "rounding down" campaign, to encourage retailers to cut prices when they relabel. Thus DM1.99 will become 0.99 euros rather than 1.02 euros.

A survey by The Independent of the cost of 10 items infive European countries - including Britain, which is not in euroland - shows enormous price disparities. Were we to have euros in our pockets today - thus avoiding punitive exchange rates and bank commission - Italy would be the cheapest place for a Big Mac and the most expensive for a jar of Nescafe. Britain would be the place to buy the iMac but not the Tomb Raider 3 computer game. The cheapest Levi 501s would be in Germany and the dearest George Michael CD in France. Overall, January sales notwithstanding, Germany is cheapest for most of the items.

It is certainly the place to buy a Peugeot 306. The basic three-door model is 6,568 euros (pounds 4,668) cheaper than in Britain.

But British motor industry analysts believe car prices will not necessarily come down to the levels of the cheapest countries. Rather, they predict prices will converge in the middle. Because Britain is exempt from European competition rules, car manufacturers are able to set up exclusive relationships with UK dealers. This provision - known as the block exemption - was criticised by a powerful cross-party group of MPs, which last month found UK consumers paid too much for their cars.

The Society of Motor Manufacturers and Traders, which has blamed exchange rates for high prices in Britain, believes pricing in euros will put the focus on the levels of purchase tax on cars, which varies from 15 per cent in Germany to 200 per cent in Denmark.

On European-wide goods such as soft drinks, toothpaste and batteries - which often have multi-lingual packaging already - consumer watchdogs believe prices will converge.

Other prices will most probably remain disparate because of cultural differences. Nescafe is adjusted to suit national palates and washing powder is frothier in northern Europe than in the south. Some consumers, therefore, might prefer always to buy locally.

The Brussels-based European Consumers' Organisation called this week for businesses to speed up efforts towards dual pricing.

The organisation - which recently found car radios to be up to 36 per cent cheaper in Rome than in London - also warns that provision must be made for consumer protection as cross-border purchases, in person or by Internet, become more common.