Spain´S Deflation 09

Spains Falling Prices Fuel Deflation Fears in Europe By NELSON D. SCHWARTZ print: April 20, 2009 VALENCIA, Spain â€" Faced with plunging orders, merchants across this recession-wracked country are starting to do something that many of them have never done: slide sell prices. Prices dipped everywhere, from restaurants and fashion retailers to pharmacies and supermarkets in March. Hoping to increase sales, Fernando Maestre reduced prices by a third on the video intercoms his company makes for homes and apartment buildings. exactly that has not helped, so, along with many other Spanish employers, he is continuing to fire workers. The nations unfounded rate, already a painful 15.5 percent, could soon reach 20 percent, a troubling number for a major industrialised country. With the combination of rising unemployment and falling prices, economists fear Spain may be in the early grip of deflation, a hallmark of both(prenominal) the Great Depression and Japans lost ten dollar bill of the 1990s, and a major concern since the financial crisis went global cash in ones chips year. Deflation can result in a downward gyrate that can be difficult to reverse. As unemployment rises sharply and consumers cut spending, companies cut prices.

But if sales do not fragment up, then revenue can decline further, forcing more cuts in workers or wages. Mr. Maestre is already contemplating additional job and wage cuts for his 250 employees. nowhere is this cycle more evident than in Spain. Last month, it became the set-back of the 16 nations that use the euro to record a negative pretentiousness rate. The drop, though just 0.1 percent, had not happened since the government began tracking puffiness in 1961, and Spanish officials have said prices could keep dropping through the summer. Some of the decline came as volatile regimen prices sank; the cost of fish fell 6.2 percent, and sugar was down 5.7 percent. But even prices in normally stable sectors like drugs and medical checkup treatments fell 0.7 percent in March, and there... If you want to get a full essay, order it on our website: Orderessay

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