Ireland's Consumer Prices Fall Most Since 1931

SHAWN POGATCHNIK

DUBLIN (AP) — Ireland's average prices fell 6.6 percent in the year to October, the sharpest rate since the Great Depresseion 78 years ago, as one of Europe's deepest recessions continues to take its toll, official data showed Thursday.

The government Central Statistics Office said October's fall in prices was the steepest since Ireland's record annual price drop of 8.4 percent in the first quarter of 1931.

Irish prices on average have been falling steadily this year, starting with an 0.1 percent annual drop in January and reaching 6.5 percent in September.

"The last thing the economy needs at this juncture is to get caught in a deflationary spiral," said Alan McQuaid, chief economist of Bloxham Stockbrokers in Dublin, referring to a trend when households put off spending in hopes of cheaper goods and retailers cut prices to attract customers.

"However, on the assumption that the global economy picks up and commodity prices rise in the coming months, then hopefully that should be avoided," he said.

Falling prices reflect Ireland's slack economy, with unemployment at 12.5 percent — the second-worst in the 16-nation euro currency zone. Consumer and price surveys still rate Ireland as the member with highest average prices, however, reflecting poor economies of scale and high labor costs.