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Deflate the State


The Bank of England Quarterly Bulletin for Q1 2009
has an interesting analysis of the hypothetical impact of deflation.
For the UK, the prospect of deflation remains just that, something that
might happen since consumer
prices there are still rising at 3.0%. Here in Ireland we are already
experiencing deflation, the annual Consumer Price Index fell -1.7% in February. Recent forecasts from Ulster Bank
project annual deflation of -4.0% for 2009, the first time we will have
had a full year of deflation since the Second World War, as illustrated
in the chart from their quarterly report. Link to article

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