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German Elation at Signs of Deflation

Deflation is not as much of a concern in Germany as it is in the rest of the euro zone.
  • Why it matters

    Why it matters

    • Signs of deflation in Germany are likely to boost, not slow consumer spending in Europe’s largest economy.
  • Facts


    • Germany’s inflation rate turned negative in January for the first time since 2009. Annual prices fell 0.5 percent in E.U.-harmonized terms.
    • German energy prices dropped 9 percent year-over-year, providing a boon to consumer spending at the pump.
    • About one quarter of the euro zone may be experiencing actual deflation – a broad-based drop in prices that could actually cause some consumers to delay purchases.
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Living in Germany just got a little bit cheaper – so what’s the problem?

It is one of the stranger aspects of the euro zone’s economic crisis. Many parts of the 19-nation currency bloc are concerned that falling prices — deflation — could grind their economies to a halt. The European Central Bank this month roared into action, making plans to launch a €1.1 trillion program to buy sovereign and private debt, to stop this from happening.

And yet, the news on Thursday that falling prices have hit Germany, too, has left most people here celebrating.

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