Chart courtesy of Eurostat.Be it Germany where I paid €3,40 for a coffee in Berlin, about double of what it was in the hailed times of the ultra-hard Deutschmark, the Netherlands, where a single fare ticket for the Metro in Rotterdam is a whopping €3,50, or Venice/Italy where a single fare with the public vaporetti - boats - has exploded from 80 Euro cents to €6,50 since the introduction of the common currency let me conclude that the real ascent of prices is closer to 7% annually since the formation of the Eurozone.

In my home country Austria gastronomy prices have been going through the roof. A simple lunch menu on Vienna's Naschmarkt where office clerks share tables with guys with ties has shot from an average of €4,35 in 2000 to €8,80 nowadays further elevates my skepticism about the true reflection of consumer prices in Eurostats HICP (Harmonised Index of Consumer Prices) figures.

Not that inflation would be a phenomenon limited to Euro members. An average lunch in the city centre of Bratislava/Slovakia, the youngest Euro member, has doubled from €5 to €10 in the last 10 years.

Recent Decline of Inflation Will Be Temporary

Seeing the upper echelons of the ECB jumping with joy about recent declines in HICP figures will be a short-lived spectacle. Italian ECB governing council member Lorenzo Bini-Smaghi told a conference on June 24 that there is a lively European debate whether we have to fear deflation or inflation more.

The debate between those who consider that inflation represents the main risk for advanced economies over the next few years and those who instead believe that deflation is the most immediate threat, has polarised, especially in the United States. It has also had an interesting echo here in Europe.

Both concerns are legitimate. To some extent, the fact that informed observers can maintain both views simultaneously can be seen as a sign that monetary policy is managing to walk the fine line between the two risks. The debate neatly encapsulates the trade-off currently facing policy-makers. They have to choose between short-term adjustments to strong recessionary forces and long-term macroeconomic stability. A key challenge is how to calibrate the policy response in the face of these forces: too timid a reaction may be costly in the near term, but an overreaction may sow the seeds of the next crisis. I will argue that a policy action that aims to ensure macroeconomic stability in the medium term requires a thorough examination of the risks, in much the same way as a disease calls for a sound diagnosis if it is to be properly treated.

They better hurry up with their diagnosis, as this crisis is far from over although my gut feeling tells me we will see a short-lived bounce this fall in economic activity before the whole mess caves in due to unsustainable debt levels on both public and private accounts.

GRAPH: A chart accompanying Bini-Smaghi's speech shows that future inflation expectations have significantly moved north since last November.

Enjoying blogger's freedom of speech I firstly expect significantly more true inflation based on the daily price shocks I experience when shopping or paying for public services which should be covered by taxes already. Double-charging has become the new norm in the leading debtor nations of the world, 9 of the first 10 of them being Eurozone countries.

Secondly I allow myself to remind the money printers in the ECB that no saver would ever fear deflation. Or would you mind if your weekly grocery bill would be lower?

The ECB's self-pride is based on clay feet though.