BERLIN: Mr. Schäuble’s comments came after consumer prices in the eurozone fell 0.2% from year-earlier levels in December and Germany rejected notion of deflation in eurozone mainly as a result of lower energy prices.
If I understand deflation as I have learned it in the past, namely that purchasers are reluctant because they expect prices to fall, then there is no sign of this. That’s what the European Central Bank and the Bundesbank also say,” Mr. Schaeuble said in an interview with N24 television. “We have no deflation. We have very low interest rates, which are a problem in themselves.”
The eurozone’s declining inflation rate in recent months has, however, prompted some ECB policy makers to sound the alarm about the risks of deflation. Many analysts said December’s fall might be the first in a string of negative readings.
ECB President Mario Draghi said in a newspaper interview earlier this month that if inflation remains low for a long period, people might expect prices to fall even further and postpone their spending.
The ECB has a mandate to keep inflation below but close to 2%. Commenting on Greece’s general election on Jan. 25, Mr. Schäuble said the country’s fundamental conditions won’t be altered by the outcome of the ballot.
