According to Enet, Greece has hit deflation for the first time since 1968 as the country’s crushing economic crisis and harsh austerity measures keep pushing down prices and consumer spending.
Consumer prices fell 0.2% year-on-year in March, the first month of deflation since 1968, the Hellenic Statistical Authority (ELSTAT) said, with EU-harmonized inflation also falling to -0.2%. The annual CPI rate of change during that period was 1.7%.
The Foundation for Economic and Industrial Research (IOBE) forecast a recession of 4.6% this year – a sixth straight year of economic contraction – and unemployment reaching 27.3%.
In its quarterly economic review, it also said that inflation is expected to remain constant at 1% this year, dropping from 1.5% last year 3.3% in 2011.
“The deflation process is expected to continue for the remainder of this year, providing some support to overly depressed disposable incomes,” said Platon Monokroussos, an economist at Eurobank.
“Overall, this is in line with the existing bailout program and likely to somewhat alleviate troika worries that prevailing rigidities in the domestic economy hinder an adjustment in domestic prices,” he said.
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