Spanish Price Collapse Could Signal New Global Woes

'It’s like the front line of a new virus outbreak'

By Jason Farago, Newser Staff

Posted Apr 21, 2009 4:45 AM CDT

(Newser) – Spain has suffered a major blow from the global economic crisis, with sky-high unemployment that could soon reach 20%, and merchants across the country are taking a drastic step: slashing retail prices. While lower costs in shops and restaurants might sound appealing, it's actually very bad news—the first sign of a deflationary spiral that can take years to end. As the New York Times reports, Spain's deflation may be showing the future for economies across Europe—and beyond.

Portugal and Ireland have both reported price drops, and just today Britain fell into deflation for the first time since 1960. But in Spain deflation has become front-page news, and one MIT economist described the country's economy as "like the front line of a new virus outbreak." In Valencia, where the main soup kitchen is feeding three times the number it did last year, one business owner said slashing prices wasn't helping: "It’s a question of survival for everybody."

A butcher in Barcelona. Falling prices in Spain suggest that the country is facing deflation. (©dipfan)

Across Spain, prices for consumer goods are falling. (©Moody75)

Fruit for sale at a market in Barcelona. Across Spain, prices for consumer goods are falling. (©thereisnosquare)

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Spanish Price Collapse Could Signal New Global Woes

'It’s like the front line of a new virus outbreak'

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Eurozone Economy Shrinks

Nine of 17 member states post a fall

Death Toll Rises in European Cold Snap

Europeans grapple with worst winter in years

Behind Europe's Economic Mess: 'Willful Amnesia'

Austerity measures violate basic economic tenets: Paul Krugman

Mighty Germany Leans on Troubled Neighbors

With unemployment at record lows, Berlin needs workers

Audience Loudly Cheers Cain's 'Blame the Jobless'

Crowd startles again in GOP debate

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Spanish Price Collapse Could Signal New Global Woes

'It’s like the front line of a new virus outbreak'

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OTHER STORIES ON OUR RADAR

Spain • Europe • unemployment • global economy • deflation • economic crisis

MOST POPULAR STORIES

[ By Views ]

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More Newser Stories

Eurozone Economy Shrinks

Nine of 17 member states post a fall

Death Toll Rises in European Cold Snap

Europeans grapple with worst winter in years

Behind Europe's Economic Mess: 'Willful Amnesia'

Austerity measures violate basic economic tenets: Paul Krugman

Mighty Germany Leans on Troubled Neighbors

With unemployment at record lows, Berlin needs workers

Audience Loudly Cheers Cain's 'Blame the Jobless'

Crowd startles again in GOP debate

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Newser By Users

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