Dangerous Deflation

22. Juli 2009

Deflation starts in Germany

Huge price cut at ALDI & Co.

ALDI lowers prices on some items by 25% again. Milk, bread, cheese and chocolate have been reduced and other discounters such as Lidl or Penny withdrew immediately after.
Stadtwerke Munich: Gas Price Cut by nearly 20%.

Even the SWM, the “Stadtwerke” Munich, fell their gas prices to 20%. Price-Cutting = wonderful new Life? First: Lower prices are good for us (the customers), but …

Deflation is the creeping danger

A deflation (a general, significant and persistent decline in the price of goods and services) makes itself felt in everyday life slowly, with the possible consequence of an inflation (the increase of prices).The prices are falling and we feel good, and afterwards prices explode upward.

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