On the other hand, consumer confidence in the euro area continued to increase in December and in January; it has now exceeded the peak level reached in 1990, with retail sales up to November showing continued solid growth and car sales growing strongly during the last months of 1998. Finally, the mixed picture is confirmed by other data.
Deflation means steady decrease of all prices and negative inflation expectations. This is not the case today. As you know our definition of price stability is below 2% but close to 2%. And today’s medium term inflation expectations, at 1,9%, are in line with this definition. German companies are complaining of a credit crunch. Are they right?