ALJAZEERA: …According to data released by Eurostat, the European Union’s statistical agency, the eurozone’s inflation rate in December slipped unexpectedly low to -0.2 percent, a fall of a half a percentage point from the previous month.
The tip into negative territory caps a poor 2014 for Europe’s economic fortunes, which in addition to tanking inflation and high unemployment, has witnessed anemic growth as well as political turmoil. And adding to the downturn in the eurozone’s fortunes is the precipitous drop in energy prices in the last year, with barrels of oil now trading below $50 for the first time in six years.
According to common economic wisdom, while lowering prices may seem like a good thing for consumers in struggling economy for day-to-day budgeting, full fledged deflation can sap demand and consumption, as people hold off on spending on the expectations that prices will lower yet further… (more)
EDITOR: So much for austerity during a recession! Contributing to Europes deflationary pressures are the sanctions on Russia.
