The "Teuro": how much inflation hides in the felt loss of value?

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Since the euro replaced the Deutsche Mark, many people feel that money has lost half its value: one euro today buys roughly what 98 pfennig (0.98 DM) bought back then – although at the changeover it was officially worth 1.95583 DM. Which average annual inflation rate does that feeling imply?

ℹ Purchasing power estimated by feel; the official consumer price index has risen less (about a factor of 1.7 since 2002, i.e. roughly 2.2 % p.a.). Fine print: 1 € = 1.95583 DM was fixed on 31 December 1998 from the ECU basket – see "How to read the formula". Change "buys what once cost" to test other estimates; "Load example" restores the euro case with 1.95583. Set the conversion rate to 1 for the same currency.

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Change any number and press "Calculate" – or use "Type in" on the right to watch it entered step by step.

What if …

Years in between × buys what once cost (old currency)›

What you learn

Felt inflation and measured inflation differ: the halving that many people feel would need about 3 % a year, the official index shows about 2.2 %. Both are enough to make long-term planning in today's amounts a mistake.

In short: A halving of purchasing power over 24 years corresponds to only about 3 % inflation per year – small annual rates add up to a big loss.

Continue with this result

The same question without a currency change: 100 euros then and now · Are 100 euros today only worth half? What does this rate mean for the pension needed in 30 years? · What $2,500 is worth in 30 years What is a saved amount still worth later at this rate? · Purchasing power of a saved amount in the future

Formula

i = (amount · rate / then)^(1/n) − 1

With the example numbers

i = (1.00 · 1.95583 / 0.98)^1/24 − 1 = (1.996)^1/24 − 1 = 2.92 %

How to read the formula

The amount today is first converted into the old currency (amount × rate) and divided by what the same goods cost back then: that is the price factor. Its n-th root minus 1 is the average annual inflation rate – the same formula as for the return on a one-off investment, only with prices instead of capital. The odd rate of 1 € = 1.95583 DM was fixed irrevocably on 31 December 1998; it came from the value of the ECU, the basket of European currencies, on the last trading day. In everyday life it became "one euro is two marks". With the cash changeover in 2002 prices were converted in different ways: many were divided correctly by 1.95583 or rounded down in the customer's favour, but some everyday prices went straight from 1 DM to 1 € – hence the German nickname "Teuro" (from "teuer", expensive). This calculator checks whether the feeling holds: enter your own estimate under "buys what once cost"; for the same currency set the conversion rate to 1.

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<iframe src="https://fintechcalc.metacruce.com/example.php?e=euro-teuro&embed=1" width="100%" height="720" style="border:1px solid #ddd;border-radius:12px" loading="lazy"></iframe>