… but were afraid to ask.
Unicredit have just published useful report for anyone heading for Munich this weekend for Oktoberfest 2010.
The key message from economist Alexander Kock CFA is that there is no danger of deflation at this year’s 17-day beer drinking extravaganza.
To assess the current overall cost of an Oktoberfest visit, we have updated our Wiesn Visitor Price Index (WVPI). In simplified terms, the cost of visiting the Wiesn breaks down as follows: the price of public transportation, the consumption of two Mass (2 x 1 liter) of beer and half a grilled chicken (Hendl).
The development of the individual price components reveals that prices have risen disproportionately since 1985. The strongest increase has been in the price of beer. In 1985, a Mass of beer still cost the equivalent of EUR 3.10, but this year Wiesn landlords are demanding on average EUR 8.65. That translates into an increase of close to 180%, or more than 4% per year (see chart). According to the consumer price index, the price of bottled beer has increased in the same period by 1.5% annually.
The WVPI shows that prices have increased by a total of almost 152% since 1985, or 3.8% annually. This is clearly above the average consumer price inflation rate of 2%
For this year, we calculate the WVPI will increase by 3.4% compared to an expected inflation rate of 1.2%. When assessing the higher price increases at the Oktoberfest, it must however be emphasized that there has also been a clearly disproportionate increase in the costs of erecting and operating a Wiesn tent, not least because of the much more stringent security requirements.
For more and to see Kock’s 10 point hangover guide (a vegetable broth works wonders apparently) go to the usual place.
Prost everyone!
