Wednesday, November 6, 2013

Euro-Zone Producer Prices Plummet

The dropping prices of goods from euro factories have been dropping significantly since September of this year. Causing a threat to the already burdened European economy that faces unemployment at its highest causing for the further influence over the decreased inflation that is anticipated to only decrease further. As seen by the European Union’s statistics agency, the drop of producer prices in Europe “that was the largest drop over a 12-month period since January 2010”. Emphasizing the momentum of the drop by comparing this year’s low inflation to 2010, when also America was facing the depths of its financial crises. This impact in Europe could further lead to a global impact, affecting other companies with low inflation rates and leading to a chain of reactions, as did the crises in America had on many overseas countries. The worry that the low inflation rates that Japan has struggles for over two decades, and what the United States had dealt with so hard to avoid with bail outs, could be the same situation that European economists have realized is close to them. With declining rates in factories there is most likely going to be a decline in consumer prices towards products. When the cost of goods are falling, this will threaten peoples jobs and investments, and if this further downgrades to what is known as “deflation”, the pressure will only intensify and prices will only continue to drop on a steady basis. This will affect European Central Bank, and further the global economy, if deflation is met.

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