Libya’s headline inflation came in negative in the fourth quarter (Q4) of 2018, the first negative inflation in 12 years.
It came in the Central Bank of Libya’s (CBL) economic report issued on Thursday, which showed the country’s core inflation reached – 1.2 in Q4 of last year.
The headline inflation in Q3 and Q2 of the same year was 9.4% and 11.6% respectively.
Negative inflation, or deflation, retards the country’s investment even when there is a real-world demand not being met. In modern economies, deflation is usually caused by a drop in aggregate demand.
When the inflation rate goes below zero, it is a poor indicator of the economy. It reflects a decline in the purchasing power of citizens and the possibility of a recession that could result in higher unemployment rate.
