Inflation Goes Negative in the Euro Zone

Spread bets and CFDs on European markets should consider that things are getting interesting right now. The euro zone economy is experiencing negative inflation for the first time as prices drop dramatically.

This economic data is creating an interesting situation for the euro zone leaders. Euro zone leaders have been cautious about their economic stimulus measures, taking small steps and largely avoiding quantitative easing. Even so, the economy is not yet in a state of deflation, reports Action Forex:

The decline in the general price level is not enough to claim that the economy is going into deflation; since the slowdown was due to the declining commodity prices, at the same time there are no clues whether producers were waiting for better prices. However, the decelerating price levels, if continued, may have a destructive impact on the European economy that is already witnessing a deep recession. The decline in prices along with the diminishing purchasing power for individuals is due to the high unemployment rates, which are making the economy very weak.

Some critics point to the current state of negative inflation as proof that euro zone policymakers haven't done enough. Euro zone leaders, on the other hand, insist that they have done plenty, and that time is needed for their measures to take effect.