Sounding the Alarm on European Deflation

Many economists are saying that it's time to take a defensive stance against the dangers of deflation in Europe.

'We don’t know if we’re in deflation now, but we can’t afford to take the risk,' said Gilles Moëc, chief European economist at Deutsche Bank in London. 'The problem is that it’s very hard to know when you’re in it, and usually when you do, it’s too late. That’s what Japan found.'

Officially, the 18-nation euro zone so far has been experiencing “disinflation” — a falling rate of inflation. Consumer prices ticked up just 0.7 percent in January from a year earlier, matching the record low set in October, according to an estimate by Eurostat, the European Union’s statistical agency.

The New York Times, Feb. 5

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