27 April 2008

Triple whammy

Inflation, strong euro and interest rates

Economic events have recently been hitting us on three fronts: the weak dollar, the drop in interest rates and inflation in Italy.

As with any national election, one of the main topics of the past election in Italy was the economy. The most recent statistics for Italy show inflation is approaching 3.5%, the highest in almost 10 years. Inflation has been noticeable in everyday things like coffee and the price of fuel for our car (unleaded is about $8.30 gallon).

When we moved to Italy we put our cash in various products that earned interest, money we use to live on here in Italy. Each time the Federal Reserve cuts interest rates that means we will have less money.

The third kick is the weak dollar. When we first started to plan our move to Italy you could get a Euro for about $1.20, now it costs almost $1.60 for a Euro. The dollar has been up and down in the past two years but the past six months it has been in a steady freefall and a turn around is not expect in the first half of the year.

Each of these means it is more expensive for us to live in Italy than when we first arrived here in May 2006. We are trying to earn more Euros but as with many things in Italy…”piano, piano”.


erin said...

piano piano...for sure. But we feel your pain on the money situation. I just try not to think about it too much - but when I do, it's sort of disheartening...

Something will work out though - it always does :)

Barbara said...

After fighting the weak dollar for nearly 5 years, it was with much sadness that we decided to put our house on the market...but no matter what happens, we can all say that we've been here and lived our dreams! Best of luck with your plans to earn money in euro....not really an option for us.

Bryan said...

I gave up thinking about the money issues a long time ago except it seems every time I look in the local paper there is a new story. One of those things we have no control over.

Anonymous said...

Your blog(s) should serve as a cautionary tale to anyone considering living in any other country. The fear of currency fluctuations should not stop anyone, they will always occur, but they should be part of your planning. (BTW, I've never followed my own advice.)