Monday, July 6, 2009

Consumer prices plunge

Consumer prices worldwide are falling at a record pace. That leaves little to fear from inflation in the short term, even while debate continues over whether inflation or deflation is the biggest threat to economic recovery.

Just look at these recent statistics:
  • Eurozone inflation has turned negative, leaving inflationary pressures in continental Europe lower "than at any time since at least the early 1950s," notes the Financial Times. 
  • U.S. consumer prices fell 1.3% in the 12 months to May, the biggest drop since 1950.
  • Japan's consumer prices in May saw  "the sharpest decrease since comparable figures were first compiled in 1971," Bloomberg reports.
  • Inflation in the Gulf region in recent months dropped from double digits to low single figures, notes the FT. "In the United Arab Emirates, inflation has tumbled from a 20-year peak of 12.8% last year to 1.9% in April. Morgan Stanley last week forecast deflation of -6.4% for 2009 for the UAE, and -1% for 2010.