BRITISH SMEs trading in the Eurozone have been warned that deflation could hit their bottom lines.
the data continues to mask the mixed realities faced by the different currency union’s
Yet the European Central Bank (ECB) says the data continues to mask the mixed realities faced by the different currency union’s members pointing out that the fall in prices was chiefly driven by a 6.3% year-on-year drop in energy prices.
Eurostat has reported that the Eurozone’s Consumer Price Index fell below zero to -0.2% in December, slipping into deflation since October 2009, while the unemployment rate across the currency area has remained steady at 11.5%.
The ECB said southern European countries, including Greece and Spain, continue to suffer deflation and unemployment double the zone’s average, while in Germany has seen on a downward trend in unemployment, now at a modest 6.5%, at the same time annual inflation is still positive at 0.2%.
Greece and many other debt-ridden periphery economies have little fiscal room to boost their economies through spending yet the ECB retains a potential silver bullet in the form of quantitative easing still up its sleeve.