Greece deep in deflation

GREEK prices fell at the fastest level on record during November, as the country enters its ninth month of deflation.

GDP declined by only three per cent between the third quarter of 2012 and the same period this year, but data released yesterday confirm that prices are deflating at an increasingly rapid pace.

In the 12 months to November, the harmonised index of consumer prices fell by 2.9 per cent, the biggest annual drop on record.

Though the shrinkage of Greek GDP is slowing, it is still faster than the government had hoped. According to the budget passed this weekend, 0.6 per cent growth is expected next year.

“While the Troika expects deflation to start to ease next year and has pencilled in price rises in 2015, we expect a far lengthier bout of deflation,” said Capital Economics analyst Ben May.