Is Canada Headed Toward Deflation?

Figures released by Statistics Canada showed the inflation rate had decreased in December to 1.2% from 2% in November. Food prices have remained stable with the biggest drop coming from gas prices. The Federal Government estimates a $64B deficit over the next two years, the largest since the 1994 budget deficit. Economists believe deflation is a remote possibility and that 2009 will be a year of recovery, but one that is drawn out.