The consumer price index (CPI) hit lows in Greece as deflation increases. Inflation contracted by 2.9 percent in November, according to the ELSTAT statistics service. This was a .9 percent drop from a contraction of two percent in October. This sudden drop far exceeded economist forecasts of 1.8 percent. Textiles and clothing dropped 11 percent, and household equipment fell 3.7 percent year-over-year.
ELSTAT also released data on the third quarter growth, or lack there of, which contracted three percent. This was inline with expectations and a slight improvement from the second quarter where a contraction of 3.7 percent was seen.
The lack of growth is stunting any payback of Greece’s massive bailout, and it is unlikely Greece would ever be able to payback the full amount. A budget for 2014 was passed over the weekend by the Greek Parliament. Parliament is working on a path to see growth in 2014 after witnessing six consecutive years of growth contraction. The International Monetary Fund (IMF) forecasts a growth of .6 percent in 2014, whereas the Organization for Economic Co-operation and Development forecast a contraction of .4 percent.
Earlier this year, Greece was downgraded back to an emerging economy earlier this year. This was the first time a developed economy has been downgraded. To add insult to injury, Greece was a founding member of the Organization for Economic Co-operation and Development.