Deflation has arrived in Germany: Inflation rate falls to -0.5 per cent in January

Jessica Morris
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Germany has fallen into deflation (Source: Getty)

Germany has slipped into deflation for the first time since the global financial crisis, supporting the European Central bank's recent decision to unleash its biggest "bazooka" on the ailing Eurozone.

Consumer prices fell -0.5 per cent on an annual basis in January, according to flash estimates from Germany's statistics office. This meant they had fallen to the lowest level since July 2009.

This shows that, despite its sunnier outlook, even the Eurozone's "star economy" is enable to inoculate itself against the spectre of prolong deflation which is currently haunting the single-currency bloc.

The Eurozone slipped into deflation at the end of last year, with the headline inflation rate falling -0.2 per cent at the end of last year, and it's expected to have slid even further when January's figure comes out tomorrow.

Earlier this month the European Central Bank (ECB) unveiled a €1.1tn (£840bn) quantitative easing package, designed to ward-off deflation and kick-start growth in the Eurozone.

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