However, the risk of “mild” deflation occurring in Germany cannot be completely ruled out and that risk is at least higher than in other euro-area economies. However, a few relevant points need to be made. •  The expected decline in CPI inflation is being driven mainly by energy prices and the appreciation of the euro.
BIS Review 25/2003  3  •  There is no indication of any restraint on private consumption induced by negative price expectations. Price expectations are positive. The decline in consumption expenditure is caused by negative prospects of lower disposable income – higher taxes and increasing costs of the social security system are expected – and employment risks.