Germany’s Consumer Price Index is set to add a meager 0.1% in March, bringing the annual pace of inflation to a 6-year low at just 0.7%. Anemic economic performance has pressured price growth lower as Germany struggles increasingly deepening recession. The economy shrank -1.7% in the fourth quarter and current expectations call a -2.5% contraction through 2009, the deepest downturn since World War II. The slump is set to push inflation into negative territory, threatening to amplify the current malaise as expectations of falling prices encourage consumers and businesses to wait for the best possible bargain, perpetually putting off spending and investment. For their part, the European Central Bank is expected cut borrowing costs by an additional 25 basis points on April 2nd, with rates set to bottom at 1% through the second quarter.
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