Deflation suffocating euro

According to preliminary data of the European statistical office Eurostat, the deflationary pressures in the euro has strengthened. Office in July expected negative annual inflation rate of 6 tenths of a percent below zero.
In comparison, inflation in June was -0.1%.
Consumer prices sink to -0.4 percent in July against the backdrop of the fall of -0.1% in June and outline new challenges for the European Central Bank (ECB), whose priority mission now is to stimulate the economy of the European Union, DPA said.
Low prices of consumer goods and contraction of consumer spending confirms fears of entering a prolonged period of deflation, which will significantly delay the recovery of the economy of the euro and 27. However, ECB President Jean-Claude Trichet remained optimistic and believe that deflationary pressures will last only a few months.
Yesterday it became clear that the first European economies – Germany, experienced negative inflation for the first time in 22 years here because of low prices of fuel. Experts estimated that Germany will overcome the negative trend even before the end of the year.
Meanwhile, the International Monetary Fund (IMF) forecast prepovtori skeptical about his „modest recovery“ of the European economy during the first half of 2010. Fund once again recommend European banks to „purge“ their assets to support economic recovery and to regain confidence in financial system

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