Deflation rolls on for nearly a year in Greece

GREEK prices declined further during December, dropping at a slightly slower rate compared to the same month last year.

Consumer price inflation for Greece last month was -1.7 per cent compared to December 2012, continuing the deflationary trend and marking nearly a year of shrinking prices. As recently as 2011, year-on-year inflation in the struggling Mediterranean economy ran at three per cent.

The news is likely to worry Prime Minister Antonis Samaras, as falling prices make servicing Greek debt more problematic. But despite falling inflation in many Eurozone countries, Berenberg chief economist Holger Schmieding says he does not think deflation will hit the union, adding: “The reasons for ultra-low inflation are partly benign: stable energy prices and fewer tax hikes are good for growth.”