Europe Consumer Prices Record First Annual Decline

Discussion in 'Economics' started by ASusilovic, Jun 30, 2009.

  1. June 30 (Bloomberg) -- European consumer prices recorded their first annual decline this month as energy costs fell and the economic slump pushed unemployment to a 10-year high.

    The 0.1 percent drop in euro-region prices is the first since compilation of the data began in 1996, the European Union statistics office in Luxembourg said in an initial estimate today. Loans to households and companies in Europe grew at the slowest pace on record in May, a separate report from the European Central Bank showed today.

    The worst recession in six decades is prompting companies to cut prices just as a 50 percent decline in the price of oil in the past year erodes fuel costs. While the ECB says it doesn’t expect a spiral of falling prices, inflation in Germany has dropped to zero and prices in Spain and Ireland have been slipping since March.

    “While the euro area’s current flirtation with deflation is likely to be temporary, reflecting energy prices, inflation is still set to undershoot the ECB’s target both this and next year, and probably in 2011,” said Colin Ellis, European economist at Daiwa Securities in London.

    Temporary ?
  2. Of course temporary. Next up: Hyperinflation! :D
  3. :D :D :D
  4. We must remain vigilant on the risks of a real price/wage spiral.
  5. 1) Economists hate deflation.
    2) When an Irish-surnamed economist in the London office of a Japanese bank believes deflation is temporary, be careful. :cool: