Detailed comparisons with Germany and Switzerland as well as an analysis of the time pattern of sub-indices of the Consumer Price Index do not indicate that the introduction of the euro had strong inflationary impact. In some sectors, however, there were price increases which may be related to the adoption of the new currency. One sector which attracted a lot of public attention was cafés and restaurants. In contrast to Germany (and other countries of the euro area), in Austria the turn of the year 2001-02 was not used to raise prices. It was not until June 2002 that price increases were implemented which can be interpreted as lagged effects of the euro cash changeover. As far as other service prices are concerned, the development in Austria deviates only marginally from that in the euro area. Prices of hairdressing, car repairs and plumbing were raised more than usual. The inflation rates of individual service prices, however, exceeded the mark of 5 percent in only a few instances. Prices of non-energy industrial goods posted only modest increases, with inflation rates well below those in Germany and in the euro area. A slight acceleration was, however, recorded in recent months. Consumer surveys suggest that consumers have perceived inflation as being higher than it has been in reality. A majority of consumers believes that the rise in inflation, which occurred in the period leading up to the introduction of the euro, was causally related to the adoption of the new currency. Part of the explanation for the divergence between actual and perceived inflation is that consumers attach a relatively large weight to price developments of items that are frequently purchased, while price developments of products less frequently purchased attract less attention. Indeed, prices of items frequently purchased, such as petrol, meat, vegetables and restaurant services posted high inflation rates in the second half of 2001 and at the beginning of 2002, while prices of other items (such as non-energy industrial goods, rents) recorded a stable development. Thus, it is likely that consumers formed an unrepresentative picture of overall price developments.