Back then, however, Germany was already able to improve its competitiveness thanks to low inflation, while rates of inflation in many other Member States were higher than that specified in our definition of price stability. Overall, though, inflation in the euro area was close to our benchmark. However, the situation today is different.
Even in Germany, inflation is and remains very low – it stood at 0.6% in May and 1% in June. Prices and wages in the crisis countries therefore need to fall even more sharply in order to make up competitive disadvantages. This in turn makes economic recovery in these countries more difficult and may therefore exert further downward pressure on prices.