Greece suffers deflation for first time since 1968 while resentment towards German austerity continues to mount

Prices in Greece fell last month for the first time in 45 years as the country's savage recession sparked deflation.
Figures released today showed prices dropped 0.2 per cent year-on-year in March, as Greece suffered its sixth year of recession under austerity measures imposed by the EU and International Monetary Fund in exchange for a bailout.
Both Greece and Portugal are generating fresh anxiety in the eurozone, as they kick back against Germany’s control of efforts to resolve the single currency bloc crisis.

Greece protests: Greece remains in a precarious state with regular protests against austerity and clashes with police, the most recent of which was just two weeks ago.

The finance ministry in Athens has compiled a secret report concluding that Germany still owes the country more than £130billion in Second World War reparations, according to reports in Greece.
The money would be enough to ease Greece's debt crisis, although any such claim in an official government report is likely to enrage Angela Merkel's government.
The document is also expected to claim that Germany owes them money for post-War loans.
It came as the Troika – the IMF, the EU and the ECB – told Portugal to expect an emergency visit in response to a court ruling that cast doubt on austerity plans.

 

The Portuguese constitutional court has overturned four of nine austerity measures in the government’s post-2014 spending plans, affecting £765million of cuts. Prime Minister Pedro Passos Coelho said he would have to make cuts elsewhere to avoid a second bailout.
Yields on Portuguese bonds – effectively the amount the country has to pay to borrow money – rose by 0.88 percentage points to 6.43 per cent, taking it closer to the 7 per cent threshold seen as unsustainable. UK gilts and German bunds also rose, but Greek bond yields continued to fall from more than 30 per cent last summer to under 11 per cent at one stage yesterday.
Athens was not helped by a 30 per cent plunge in the value of shares in two banks, as the pair were forced to put merger talks on ice. National Bank of Greece and Eurobank were months into negotiations over a tie-up.
But they failed to meet the Troika’s condition that they source 10 per cent of cash they need from private investors, meaning four Greek lenders will be recapitalised by the state bailout fund.
Greece has not suffered a period of deflation since 1968.
Platon Monokroussos, an economist at Eurobank, told Reuters: 'The deflation process is expected to continue for the remainder of this year, providing some support to overly depressed disposable incomes.
'Overall this is in line with the existing bailout programme and likely to somewhat alleviate troika worries that prevailing rigidities in the domestic economy hinder an adjustment in domestic prices.'