Deflation in Greece Hits Record High in November

Consumer prices in Greece experienced their fastest annual decline since record-keeping began in November, according to a report released on Monday. This decline is attributed to unprecedented unemployment levels and stringent government austerity measures affecting demand.

The annual consumer price inflation rate decreased by 2.9% in November, as reported by the statistical service ELSTAT. This marked a significant slowdown from a 2% drop in the previous month, while economists had anticipated a 1.8% decline.

In contrast, the eurozone’s annual inflation rate rose to 0.9% in November, recovering from a four-year low of 0.7% recorded in October.

The report highlighted that clothing and textile prices plummeted by over 11%, while costs associated with household equipment dropped by 3.7% year-over-year.

In a separate update, ELSTAT revealed that the Greek economy contracted by 3.0% year-over-year in the third quarter, consistent with preliminary estimates and an improvement from a downwardly revised contraction of 3.7% in the previous quarter.

Last month, the Organization for Economic Co-operation and Development (OECD) cautioned that falling prices could jeopardize Greece’s bailout conditions by hindering economic growth and leading to a higher-than-expected debt-to-GDP ratio.

The Greek parliament recently approved the budget for 2014, forecasting a return to growth in the coming year after experiencing six consecutive years of recession. Both Athens and the troika of international lenders—comprising the International Monetary Fund, the eurozone, and the European Central Bank—projected a growth rate of 0.6% for 2014. However, the OECD predicts that the Greek economy will contract by 0.4% next year.