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.
Then we soon find ourselves in a vicious circle in the euro area. BIS central bankers’ speeches  3  Overview of the measures adopted in June: design and necessity It was these risks – in particular, the danger of a decoupling of inflation expectations – that made the ECB’s Governing Council take responsive action in June.