We have been watching the Euro drop in value against the Dollar over the last few months in a way that is quite exciting for a traveling American. Today, it has reached a level not seen in 20 years. So, what does this mean for travel plans to Europe for an American?
First Time in 20 Years – The Dollar is Almost Even with the Euro
Today, 1.023 US Dollars would get you €1. That is as close to parity with the currencies as it has been in 20 years! Normally, it drops a bit during the winter and then the Euro’s value starts climbing around springtime. Last year at this time, it was $1.18 to €1. So, this represents a significant savings for those shopping Europe with dollars as opposed to last year.
And, many experts are predicting it may reach parity in the next month! Even now, this is great for US shoppers when there are items that are at the same price in the Euro that it is in the dollar.
For example, if you can buy a pair of running shoes (one of the things I have been shopping for and just bought for the first time in Europe recently!) for $100 in the US and that same pair costs €100, depending on the state you live in, it is actually cheaper in Europe now because of the sales tax you would pay in the US. In Europe, there is the VAT (value added tax) which is built in to the price so what you see is what you pay.
What Does This Mean for European Travel?
But, what does this truly mean for your travel to Europe this year, if you plan on making such a trip? Well, it is somewhat difficult to say exactly since the world is facing inflation rates that are quite high. Europe, as a whole, is currently at 8.6% inflation with some countries doing worse than that (Greece is over 11%). The same applies to the US with inflation as well.
In Greece, for example, there have been price hikes on food that have gone up to 30% in the last few months! Electricity has also seen hikes due to the Russia/Ukraine conflict going on now. This means that, for a tourist, things like restaurants are going to be charging more than they did in previous years and hotels will also be charging more to cover their increased cost in electricity.
However, there are still deals to be had and, in some places in Europe, it could actually be significantly cheaper to travel to Europe this year, with the US Dollar, than in previous years. I have seen many prices at hotels in Greece actually not that much more expensive than previous years so you can get a bargain with those. If you feel certain about your travel plans, you could even pre-pay for your lodging now and lock in the sweet USD = Euro exchange rate. But, it will still likely go down so you may want to wait and see.
If you already have travel plans to Europe, expect that US dollar to take you a little farther than you could have gone a few months ago, thanks to the stronger dollar now. Price hikes are all around us but the power of the dollar takes some of the sting out of those inflationary costs.
Just make sure you are using a credit card with 0 foreign transaction fees!!!