| Czech
prices won't catch up with the rest of Europe any soon
There is an ancient Czech saying that goes
along the lines of ...
'If the price of beer in the Czech
Republic were to rise significantly - the Czechs would uprise
in revolution'.
And there would be nothing velvet about such a revolution.
And that just about says it all about possible
rises and hikes
in costs and prices in the Czech Republic.
It also underlines the fact that the Czechs
will take their time in catching up with the rest of the EU prices
and costs.
Take the atrocious
example of the Italians.
This example is used to explain something that would never
be allowed to happen in Czech economics.
Not from the side of the Czech government - who are capable of worse - but from the side of the Czech consumer who for decades if not centuries has learned to count his pennies / crowns very carefully.
When the Euro was introduced in Italy, at a rate of 1 Euro to
1936,27 of the old Italian Lira, most prices went up slightly
to bring the figure up to 1 Euro = Lira 2000.
Italian merchants rounded up the exchange rate from 1936,27 to
2000.
A small difference of 63,73 Lira for each
single Euro
Small ????!
Say 20 million Italians spend 50 Euro each
day and this would include the 'small' hike of 63,76 lira
That makes 6 373 000 000 of hiked lira.
In simple language about 6 billion and 373 million lira - just
for the 'small' hike.
And this was just for starters.
Slowly prices soared to such an extent that
today quite a lot of
prices are now equaled to: 1 Euro = 1000
Lira.
That's almost double the original value the lira had on the Euro.
A practical
example of Italia Euro hiking:
a glass of mineral water taken at an italian bar or motorway pertol station before the introduction
of the Euro used to cost Lira 200, which makes about 10 cents
of the set Euro value at the time of the transition.
5 years into the Euro the same glass of mineral water now costs
50 cents (half an Euro) which makes 968 of the old Lira - almost
five times as much as before the Euro.
Similar price hikes happened in Germany
and France.
Imagine the average Czech going to his local
hospoda (pub) one evening and being asked to fork out not the
usual 18 czech crowns for a liter of Czech beer (2 pints) which
would be about 55 cents of an Euro but 90 Crowns - or five times
as much.
He'd have a heart attack and that particular
hospoda might as well start calling in the bankruptcy auditors
- if the locals hadn't burnt it down before.
So for the Czech Republic to catch up with
the rest of Europe price wise, it's going to take decades and
you don't need to be an economist to figure this out.
If 2 pints of beer must cost 'x', then bread
can't cost 'xx' and a bricklayer cannot suddenly start charging
his UK/Irish counterpart's rates.
Life and living in the Czech Republic
will remain dead cheap compared to other western European countries
for some time yet.
But... bear in mind we are talking about
living costs, prices of daily products, petrol, cigarettes etc,
and also of services and labour costs.
As far as Real Estate goes, the rise in
prices is somewhat steeper each year and although the Czechs themselves
are today more capable of buying their own property, many of them
still have to rent apartments and houses which are still too expensive
for their budgets.
Not so for the foreign investors.
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