The following chart from the sdw facility of ECB shows that Greek deflation dynamics are ongoing and strengthening:
Ever since mid-2012 both the core inflation (HICP excluding energy and seasonal food) and the services inflation are in negative territory at an accelerating pace. Current core inflation figures stand at -2% while services at -3.5%. After dropping to -5%, durables goods inflation now reads -3.5% showing relative signs of stabilization.
In general, core/services inflation rates of (negative) 2-3.5% can only suggest a very wide output gap which is certainly not an indication of imminent return to positive GDP growth rates. Furthermore, recent GDP figures show that nominal GDP/income continues to fall at close to -6% with the improvements in volume statistics being only the result of higher deflation (GDP deflator is now close to -2.5%). These are the typical elements of a debt deflation cycle with real debt burden increasing compared to a falling nominal income which eventually results in an increase of NPLs and debt-to-GDP readings and also to lower economic activity since consumers start to postpone purchases (especially of durable goods) in anticipation of lower future prices.