“Less worse” is a weird phrase, but it seems to characterise Greece’s pricing problem well.
According to new data from ELSTAT, Greece’s consumer price index fell 1.5% year-over-year in January. That’s right. It fell. Greece’s is an economy experiencing deflation.
If there’s a positive spin to any of this data, it’s that the pace of decline in prices appears to be decelerating (see chart below).
Deflation is a scary thing because it encourages consumers to hold off on purchases as prices go lower. Unfortunately, this effectively forces producers to cut prices even further. All of this has the potential to spiral, bringing down wages and the entire economy with it.
Greece’s economy is just in horrific shape. On Thursday, we learned that the country’s unemployment rate hit a record high of 28% in November. A lot of the decline in prices comes from the fact that the Greek consumer just can’t afford to buy things.
This second chart shows what prices are falling and by how much. As you can see, even Greece can’t keep healthcare prices down.
While Greece hasn’t been dominated the headlines like it used to, it still remains a country in crisis.
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