Greek Inflation Turns Negative, First Time in 45 Years

A man eats food donated  by the Greek church in central Athens.
Aris Messinis | AFP |Getty Images
A man eats food donated by the Greek church in central Athens.

Greek consumer prices entered deflationary territory for the first time in 45 years as the country's deep recession pushes down prices, data showed on Tuesday.

Consumer prices fell 0.2 percent year-on-year in March, the first month of deflation since 1968, Greece's statistics service said, with EU-harmonized inflation also falling to -0.2 percent.

Greece's economy is in its sixth year of recession, hurt by austerity policies imposed under a bailout from the European Union and International Monetary Fund which is keeping the country afloat.

"The deflation process is expected to continue for the remainder of this year, providing some support to overly depressed disposable incomes," said Platon Monokroussos, an economist at Eurobank.

"Overall this is in line with the existing bailout program and likely to some what alleviate troika worries that prevailing rigidities in the domestic economy hinder an adjustment in domestic prices."

Data on Tuesday also showed industrial output fell 3.9 percent year-on-year in February after dropping 4.2 percent in the previous month, underscoring the grim state of the Greek economy.