Spain gets deflation

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Spain is one of the original four bubble economies to implode.  This group includes the U.S., the U.K. and Ireland.  Unfortunately for the Spanish, in the wake of their property crash, things in Spain are looking particularly bleak with unemployment rising, GDP plummeting, and banks like Caja Castilla-La Mancha and property developers like Martinsa Fadesa and Drac hitting the skids.  Add deflation to this list of concerns.

The harmonized inflation rate in Spain – measured in the same way in all countries of the euro-zone – fell 0.1 percent in March, representing the first interannual decline in prices in the history of this indicator since it began to be developed in 1997.

Throughout the history of this indicator, which began in January 1997, this has never come to pass. It is also the eighth consecutive decline experienced by the annual HICP, which has tailed off since July 2008.

The annual rate of HICP usually tracks — and it varies little, usually by tenths of a percent —  the overall CPI, for which March figures are to be published next April 15.

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Look at the graph below to see how precipitously inflation has dropped in Spain.
ipc2

Clearly, Spain is in depression — and things are likely to get worse before they get better. The U.K., the U.S. and Ireland will have to do some heroic things to avoid an equally dismal outcome.  While the U.S. and the U.K. can try to print their way out of depression, Ireland, along with Spain doesn’t have that option.

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Source
La inflación cae el 0,1% en marzo, su primer descenso de la historia – Finanzas.com

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