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Economics explained
Category:
Inflation and deflation
Deflation
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Deflation
Deflation is defined as a persistent fall in the general price level of goods and services in the economy - in other words, the inflation rate is negative, for example, –3%.
It results in a rise in the value of money, with each currency unit having greater purchasing power.
Disinflation
In contrast, disinflation occurs when the inflation rate falls but is still positive.
For instance, the inflation rate may decline from 8% to 6%. In this case, the price level is still rising but at a slower rate.
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