patrick.net

Falling wages and prices are symptoms of deflation. Spain’s economy is still shrinking, despite the rhetoric claiming it is slowly recovering from a two year recession.

"A deflationary spiral feeds on itself. As salaries fall, consumers have fewer dollars to spend and tend to pay off debt instead, believing that less debt will give them more resources in the future. But to compensate for the lack of sales, businesses cut salaries and further lower prices of their goods and services. The result is that debt actually becomes even more expensive to repay, further restricting consumption. This circular behavior only gets worse with time and no central bank manipulation works to thwart the descending trajectory of wages and prices."

http://www.globaldeflationnews.com/spain-enters-the-deflation-zone-europes-fourth-largest-economy-on-the-ropes/