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By Brian Parkin
July 20 (Bloomberg) -- The risk that recession in Germany may spill over into deflation, a spiral of falling prices and rising unemployment, has ebbed, the Finance Ministry said in its latest report.
The threat of deflation rose on a sharp drop in consumer prices in the early part of the year, said the ministry today. Yet by June, price developments showed a more mixed picture, it said. Prices for finished goods and for services are rising compared with a year ago.
“A deflationary tendency can’t be extrapolated” from inflation trends in the early part of the year, said the Berlin-based ministry. Deflation woes, colored by falling prices in certain sectors, were partly fuelled by a statistical overhang from a steep rise in oil prices in 2008, the ministry report said. Price developments for the remainder of the year will “remain calm,” it added.
Moderate price developments may help Germany pull out of its worst recession since World War II by damping company costs and supporting private consumption. Recession has been squeezed out of some sectors such as manufacturing, where production levels have stabilized, the ministry said.
Germany’s labor market is proving “remarkably robust” in the crisis, it added.
http://www.bloomberg.com/apps/news?p...d=aig4Evn8mI6o
July 20 (Bloomberg) -- The risk that recession in Germany may spill over into deflation, a spiral of falling prices and rising unemployment, has ebbed, the Finance Ministry said in its latest report.
The threat of deflation rose on a sharp drop in consumer prices in the early part of the year, said the ministry today. Yet by June, price developments showed a more mixed picture, it said. Prices for finished goods and for services are rising compared with a year ago.
“A deflationary tendency can’t be extrapolated” from inflation trends in the early part of the year, said the Berlin-based ministry. Deflation woes, colored by falling prices in certain sectors, were partly fuelled by a statistical overhang from a steep rise in oil prices in 2008, the ministry report said. Price developments for the remainder of the year will “remain calm,” it added.
Moderate price developments may help Germany pull out of its worst recession since World War II by damping company costs and supporting private consumption. Recession has been squeezed out of some sectors such as manufacturing, where production levels have stabilized, the ministry said.
Germany’s labor market is proving “remarkably robust” in the crisis, it added.
http://www.bloomberg.com/apps/news?p...d=aig4Evn8mI6o