Thursday May 14, 01:54 PM
Deflation worsens in Ireland
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DUBLIN (AFP) - Retail prices in recession-hit Ireland slumped 3.5 percent in April on a 12-month basis, official data showed Thursday, as the eurozone nation was plagued by its worst deflation since the 1930s.
"The last time the Consumer Price Index was this low was in the second quarter of 1933 when it was minus 6.9 percent," a Central Statistics Office (CSO) spokesman told AFP.
Ireland, the first eurozone member to fall into recession as a result of the global financial crisis, has suffered a run of falling prices, or deflation, on weak consumer demand.
"Consumer Prices in April, as measured by the Consumer Prices Index, decreased by 0.8 percent in the month. This compares to an increase of 0.1 percent recorded in April of last year," the CSO said in a statement.
"As a result, prices on average, as measured by the CPI (NYSE: CPY - news) , were 3.5 percent lower in April compared with April 2008."
In January, a 0.1-percent 12-month decline was the first time the country had experienced falling prices since the early 1960s. The annual rate of inflation stood at minus 1.7 percent in February and minus 2.6 percent in March.
"Having in January posted its first negative year-on-year change in the CPI since 1960, the subsequent months have seen a further sharp drop in price pressures," said Alan McQuaid, an analyst at Irish stockbrokers Bloxham.
"The main factors contributing to the monthly CPI change in April were further decreases in average mortgage interest repayments, as well as price falls in clothing and footwear, and household equipment and furnishings due to sales."
Deflation is a danger in a contracting economy such as Ireland's because it encourages people to defer purchases in the hope of getting them cheaper later on.
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