In Spain, inflation is plummeting. If nothing changes, everything points to deflation next months.At first sight, the fact that prices fall could seem something positive. After all, we would have a higher purchasing power (if we keep our job).
However, if you think about it, you will see it isn't as good as it seems: would you buy something today if you know it will be cheaper tomorrow? Actually, you would buy your most pressing needs, but not a house or a sofa, for example. Other people would do the same and sales will take a nose-dive. So, more people would be fired (increasing the number of unemployed people).
Today, there are more than 3,200,000 unemployed people in Spain. Unemployment increased in 200,000 people last month: it means more than 6,600 people a day. What will happen if our economy gets in deflation?
James Wilkinson
