German [B]Producer Prices[/B] are expected to fall at an annual pace of -6.5% in June, the largest drop since records began in 1977. The result will foreshadow continued downward pressure on consumer prices, the headline inflation gauge, as lower wholesale costs filter down into the final price tag. The reading adds to building evidence that Germany and the Euro Zone as a whole may slip into deflation, threatening to leave the economy mired in a long-term period of stagnation as expectations of lower future prices discourage spending and investment.
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