Sure, but the author was eating three course dinners in Paris and staying in sunny hotels in Florence with those $5 a day. Try doing that with $40 nowadays.
The difference is, of course, mostly in the rates between the dollar and the European currencies, rather than simply an increase in costs locally.
> mostly in the rates between the dollar and European currencies
I think this might be true in some countries -- it used to be way cheaper to go to countries in Eastern Europe before they joined the Euro. But I believe that Germany and France would have always been rather expensive since they had rather strong currencies.
As far as the Euro is concerned, USD / Eur is the highest it's been in 10 years [0].
The difference is, of course, mostly in the rates between the dollar and the European currencies, rather than simply an increase in costs locally.