Of the eurozone’s 18 countries, Portugal, Greece and Spain are in deflation.
Figures just released from Eurostat show that Italy now is on the borderline when its inflation rate dropped to zero in July. The country has already returned to recession.
While inflation was 0.4% as a eurozone average for the year, the lowest since October 2009, the annual rate in Portugal was -0.7%.
Greece was just ahead with -0.8% and Spain not far behind at -0.4%.
This means that prices in these countries have fallen.
Although lower prices are usually welcomed by the consumer, they are troubling for the economy. If people believe that the price of goods will be lower next month, they may well put off making purchases. The result is that retailers also have to wait, leading to lower profits and letting staff go.
Deflation also puts enormous pressure on governments which are trying to service enormous loans because they have to find increasingly large sums of money to repay them.
