Nick and I just returned from our conference in Europe. The thing that sticks out – but is impolite to mention in mixed company – is the very low prices of quality foods in everyday eateries.
Let me explain. I’ve had truffles in Sydney. Once, many years ago. I couldn’t tell if the truffles were real or synthetic as they weren’t shaved over the meal but mixed into it. The price of that single dish was $58. I felt like I needed a shower when I received the bill.
In Tuscany, I ordered pastas daily and truffles would be shaved on top of the dish for an extra EUR2 (that’s around A$3.00). The total cost of the dish rarely exceeded EUR 9 (A$ 13.50).
In Pamplona, we sat in a bar with two others and enjoyed 10 tapas dishes and a dozen glasses of Spanish Rose as well as four Spanish beers. Total cost: around EUR 42 (A$ 63). What shocked us was that a glass of Rose was EUR 1.30 (A$ 1.94).
Breakfast in Barcelona. Four croissants (with ham and cheese) with three coffees and a freshly squeezed OJ EUR 9.80 (A$ 14.63). Before you ask, we actually lost weight whilst on these diets. Probably because we were doing in excess of 20,000 steps per day.
If you had the same breakfast anywhere in Sydney – never mind the CBD – it would be almost three times the price. Why?
The answer is quite simple really. The cost of the rent that our restauranteurs pay as well as the wages they have to pay their staff. Those two expenses are inter-related. Spain and Italy have suffered the worst recession since the 1930’s. The prices of properties and rentals have fallen tremendously. Very high unemployment has meant that wages have been kept in check. If people aren’t earning money they’re not buying property. We’ve not experienced a recession in Australia for 25 years. That means wages and rentals have marched forward unchecked.
In Spain – since 2009 – they’ve experienced a massive drop in property prices and still have unemployment rates above 18% (albeit it’s down from a peak of 26%). People have had to adjust their wage expectations. In Italy, unemployment has remained steady at above 12% for the last three years. Australia’s unemployment rate for the last three years has been under 6%. So, if you’re waiting for a massive fall in property prices as well as the prices of goods, the Australian unemployment rate will need to rise dramatically. That’s not good for any of us and is now – thankfully – unlikely to happen in this economic cycle.
So, keep paying triple the price for everything and be grateful you have a job. Otherwise, there’s a great flat in Barcelona going for EUR 250k (A$ 375k)…