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Cheaper to Live? Free Market’s Effects Elude Experts, Shoppers

December 14, 1990

BERLIN (AP) _ Their goose may be cooked next year, but at least it won’t cost much this Christmas. But take a gander at those side dishes: bread and potatoes have doubled in price.

The traditional holiday feast enjoyed by east Germans represents, in a way, the jarring vagaries of the world’s swiftest transition from planned socialist economy to unbridled free market.

It also illustrates just how difficult it is to tell whether living costs in this dramatically evolving society are falling, climbing or holding steady pending a collapse next year.

New statistics from the federal government this week show that the cost of living actually fell 1.9 percent from November 1989 to last month.

But economists say that figure means little, and is like comparing apples to oranges. Consumer complaints also cast doubt on the statistics, which cover everything from furniture to medicine to apples and oranges.

″The comparison with the previous year is worthless,″ said Berlin economist Heine Flassbeck, whose German Institute for Economic Research tracks the loopy eastern German economy.

″The main problem is that you cannot compare with the previous year because you had a different basket of commodities, different quality, from different sources.″

According to the Federal Statistics Office, food is 12.4 percent costlier this year, while household goods are 23.4 percent cheaper. Clothing dropped 31.9 percent, while health products rose 23.7 percent.

Perhaps the variances are best illustrated by the cost of the traditional Christmas dinner: a goose, red cabbage, potatoes, bread, sweets and sparkling wine.

The eastern German farm economy was geared mainly toward red meat, not poultry. When the market opened, poultry imports flooded in.

Today, that Christmas goose will cost about 30 percent less, said Sylvia Koehler, a government statistics expert in Berlin.

By comparison, potatoes and red cabbage - staples heavily subsidized by the former Communist government - have risen by 214 percent and 79 percent respectively.

Bread, likewise, was heavily subsidized and used to cost about 54 cents a loaf. It now sells for about $1.36.

However, chocolate and walnuts cost half as much because of a competitive flood of Western imports. Sparkling wines are about 70 percent cheaper.

Finished with dinner? Coffee always was scarce in East Germany and sold for about $4.76 a quarter pound. Now, the same money buys the whole pound, Mrs. Koehler said.

″I don’t think I’ll pay more for my Christmas dinner″ than in the past, she said Friday.

Neither does Ingrid Correa of Berlin, who said it is the abundance of goods spanning vast price spectrums - and the high jumps in a handful of once- subsidized staples - that skew the grocery bills. ″We think everything is more expensive, and a lot of it is,″ said the 48-year-old philosophy teacher after she emerged from a grocery store Thursday. ″But if you shop carefully and avoid all the new things, food can cost the same.″

But she also points out what the economists forecast: the rough part of the former nation’s economic transition won’t begin until after the holiday dishes are put away.

Right now, only 600,000 workers are officially unemployed. But up to 1 million are believed to be carrying post-dated layoff notices that kick in during the first quarter of 1991.

The most pessimistic projections? Up to half the 8 million workers will be jobless next year.

Living costs also could jump in January because remaining subsidies will begin peeling away. Rents, now as low as $41 monthly, will begin rising.

Energy costs will double. Public transportation - a one-way bus or subway trip costs only 14 cents - also will jump.

East Germany officially converted to a free market July 1. Flassbeck said it will take a year to gauge whether people are prospering, keeping pace, or sinking into poverty.

″(Determining) the cost of living is impossible at the moment,″ he said. ″This is why we cannot say what has happened to real income. Has it fallen, has it gone up?″

For Annette Flohr, a 27-year-old working mother from Berlin who bought groceries on her lunch hour, the answer is simple.

″If I have a job, I can survive,″ she said.

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