my personal blog

July 2, 2006

Keep the Penny

Filed under: business — Tags: , , , — Alfonso Surroca @ 7:16 pm

If we stop circulating the penny (as discussed in this news story)we can expect merchants to round-up their prices. Yes, proponents claim otherwise, but history does not agree.

After the introduction of the Euro currency, it was commonplace for merchants in Euro area countries to round-up their prices across the board to retain “attractive” numbers such as .99 in their prices. Although it had only a minor effect across the board, this caused a decrease in consumer spending that put a slight damper on economic growth related to the introduction of the new currency.

Mark my words, despite claims, prices will increase slightly across the board, causing slight price inflation that will hit the “working class” average Joe. For example, if a product currently costs 2.91, expect it to go up to 2.95, not 2.90.

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