A cafe in Rome has been found guilty of artificially inflating prices after the switch to the single European currency, thus confirming the suspicions of many of the country's consumers. The court ruling will hopeful deter deliberate 'euroflation' and restore some consumer confidence in pricing, thus stemming any further damage to the consumer sector.

Italian consumers have long been suspicious about the unethical inflation of prices following the transition to the euro in January 2002. Their suspicions have now been confirmed by a court in Rome, which has ordered a cafe in the city to pay compensation of €0.23 per cup of coffee sold at the inflated price, after it was found guilty of increasing prices illegally.

The cafe put up the price of a cappuccino from ITL1,500, the equivalent of €0.77, to €1 following the change of currency. The bar owner claimed to have made these changes for the convenience of using round numbers.

This is the first such ruling since the euro replaced national currencies, and such rounding of prices is prohibited by statutes in most EU member states that have adopted the common European currency. This has resulted in strange-sounding prices in France for instance, where the rules have been tightly enforced. Consumers in other EU countries have complained vociferously about 'euroflation', most notably in Italy but also in Germany and Greece, where consumer boycotts have been organised to protest against the practice.

Silvio Berlusconi, Italy's notoriously opinionated and somewhat volatile Prime Minister, appeared to lend credence to these claims when he advised Italian consumers to shop around for the best prices to avoid the effects of alleged price fixing. Italian consumer groups believe the practice of rounding up has cost each Italian household an average of €2,800 over the past two years.

These opportunistic price increases are a contributory factor to the country's above average inflation, which is currently registering 2.6% against a 2.1% average in Europe overall. They also have the undesirable effect of denting consumer confidence, affecting Italians' spending on food, drink and personal care products in particular and leading Italians to regard such purchases as increasingly unnecessary.

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