In November 2015, the consumer price index fell, decreasing by 0.2% according to the INSEE, which keeps the accounts every month. The decline is partly seasonal and despite everything, over a year, consumer prices remain stable.
Inflation is also very low throughout the eurozone: it was 0.3% in August, a record in five years.
The risk of deflation is therefore not very far. What is it about? Deflation is the general and sustained decrease in prices.
It mechanically leads to a decrease in consumption—if prices fall, why buy now what will cost less tomorrow?—but also in investment because people are less inclined to buy and thus to borrow.
And so, GDP growth declines.
A vicious circle that is very hard to break out of!
