Deflation Seen Shoving Ireland Ever-Deeper Into "Recession"
Bloomberg:
Dublin’s Deflation Sounds Alarm as ECB Hesitates
None of the customers who come into Dublin’s Kingsbury Furniture these days expect to pay full price.
“When people buy something, they say, ‘This isn’t going to be cheaper in a couple of weeks, is it?’” said Jimmy Owens, manager of the store in the Irish capital’s Tallaght district.
Ireland, struggling with a ballooning budget deficit and record unemployment, has been at the vanguard of Europe’s economic collapse. Now deflation threatens to push the country deeper into its worst recession in eight decades.
With inflation grinding to a halt across the rest of the euro region, Ireland may serve as a test case for policy makers, forcing the European Central Bank to accept falling prices as a serious problem.
“The scale of the shock hitting the Irish economy is massive, but it gives the heads-up for the dynamics we should expect to see for other euro-zone countries,” said Ken Wattret, chief euro-region economist at BNP Paribas in London. There’s a “significant risk of a prolonged deflation.”
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Retail sales dropped 20 percent in January, the most since the data were first published in 1974, and unemployment claims surged to a record 372,800 last month, as companies including Dublin-based Ryanair Holdings Plc, Europe’s largest discount airline, and Round Rock, Texas-based Dell Inc., the world’s second-largest personal-computer maker, cut jobs...
Dublin’s Deflation Sounds Alarm as ECB Hesitates
None of the customers who come into Dublin’s Kingsbury Furniture these days expect to pay full price.
“When people buy something, they say, ‘This isn’t going to be cheaper in a couple of weeks, is it?’” said Jimmy Owens, manager of the store in the Irish capital’s Tallaght district.
Ireland, struggling with a ballooning budget deficit and record unemployment, has been at the vanguard of Europe’s economic collapse. Now deflation threatens to push the country deeper into its worst recession in eight decades.
With inflation grinding to a halt across the rest of the euro region, Ireland may serve as a test case for policy makers, forcing the European Central Bank to accept falling prices as a serious problem.
“The scale of the shock hitting the Irish economy is massive, but it gives the heads-up for the dynamics we should expect to see for other euro-zone countries,” said Ken Wattret, chief euro-region economist at BNP Paribas in London. There’s a “significant risk of a prolonged deflation.”
...
Retail sales dropped 20 percent in January, the most since the data were first published in 1974, and unemployment claims surged to a record 372,800 last month, as companies including Dublin-based Ryanair Holdings Plc, Europe’s largest discount airline, and Round Rock, Texas-based Dell Inc., the world’s second-largest personal-computer maker, cut jobs...