Source:
Guardian (UK)Deflation returned to Britain for the first time in nearly five decades last month as prices measured by the retail price index (RPI) were lower than the same time a year ago.
The Office for National Statistics said the RPI was 0.4% lower in March than it had been in March 2008. That was the first negative reading since March 1960, when Harold Macmillan was prime minister and John F Kennedy was running for the US presidency.
On the government's preferred consumer price index measure, which excludes housing and mortgage costs, inflation was still comfortably in positive territory, at 2.9%. CPI is much higher here than the 0.6% figure for the eurozone and economists say the falling pound has pushed up some import prices, delaying the drop in the CPI.
A short period of falling prices should help consumers because it will make their increasingly squeezed income go further. However, if prices continue falling for a long period and deflation becomes entrenched, that can have an adverse effect on the economy as consumers continually hold off making purchases in the expectation of lower prices. This in turn forces firms to cut wages and sets off a damaging spiral.
Read more:
http://www.guardian.co.uk/business/2009/apr/21/deflation-returns-rpi-negative
We are having firebrand sales on everything from clothes to holidays via cars to food here in Belgium. And it's not a sales period. :shrug: Every other firm is advertising "tackle the crisis, we tell you how" and "get more xx for your money" etc.
So I don't feel as if continental europe is gonna be spared. The article ends stating the danger of a stalling economy is bigger than that of inflation. Hooray for quantitative easing! The ECB is also talking about "unconventional" measures - likely the code word for said easing. I was hoping we would not join in that game but alas.
On edit: bad copy and paste, first word in the text is DEflation, thanks Ghost Dog :blush: