Signs of deflation are all over the map. Spaniards are paying 13.5% less today for a loaf of bread (60 cents) than they were in October. In March the U.K. the Retail Prices Index fell 0.4% year over year. That has had an unusual outcome: European and Australian private equity firms, which bought up Britain's Southern Water, Anglian Water and South East Water a few years ago, have had to inject cash into the utilities because deflation put them at possible risk of breaching their loan agreements, which are linked to the value of the assets, themselves tied in part to the RPI. In Tokyo apartment rents have declined 10% and more this year; a three-bedroom apartment with a monthly rent of 800,000 yen ($8,000) now goes for $7,000, real estate agents say, and landlords are often willing to negotiate prices and terms. Deflationary expectations are cutting into Tapanese wages as well as prices: Struggling with weak demand for exports, manufacturers are cutting way back on overtime.
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