deflation

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Deflation

Decline in the prices of goods and services. Antithesis of inflation.

Deflation

A situation in which a currency gains value, often resulting from a decrease in prices. Many economists believe that deflation is the result a fall in demand for goods and services, which causes producers to reduce prices. This reduces their profits and causes a reduction in investment, which contributes to a further drop in demand. Because of this deflationary spiral, deflation is often associated with recessions and depressions and has been known to cause unemployment. It is also called negative inflation. See also: Lost Decade, Inflation.

deflation

A reduction in consumer or wholesale prices. The term generally applies to more than just a temporary decline. Compare inflation. See also disinflation.

Deflation.

Deflation, the opposite of inflation, is a gradual drop in the cost of goods and services, usually caused by a surplus of goods and a shortage of cash.

Although deflation seems to increase your buying power in its early stages, it is generally considered a negative economic trend. That's because it is typically accompanied by rising unemployment, falling production, and limited investment.

deflation

a fall in the rate of growth of the general level of prices in an economy, or an absolute reduction in the general level of prices (see PRICE INDEX). The authorities may seek to deflate the economy in order to combat INFLATION and eliminate a BALANCE OF PAYMENTS deficit by using restrictive monetary and fiscal measures, i.e. increasing interest rates and taxes to cut spending. See ECONOMIC POLICY, MONETARY POLICY, FISCAL POLICY, PRICES AND INCOMES POLICY.

deflation

a reduction in the level of NATIONAL INCOME and output usually accompanied by a fall in the general price level (DISINFLATION).

A deflation is often deliberately brought about by the authorities in order to reduce INFLATION and to improve the BALANCE OF PAYMENTS by reducing import demand. Instruments of deflationary policy include fiscal measures (e.g. tax increases) and monetary measures (e.g. high interest rates). See MONETARY POLICY, FISCAL POLICY.

References in periodicals archive ?
In addition, similar measures are presented for Ireland--the economy, in which the recent financial crisis led to the most negative inflation among euro zone economies.
Remember that the negative inflation rate merely means that spending power is increasing overall instead of decreasing.
Margins should benefit from higher interest rates and a reversal of the effect of negative inflation on UF-indexed assets and liabilities, and asset quality pressures are already easing during the first part of the year.
According to the Statistical Service, the evolution of the HICP records a negative inflation rate of -1,6% in January 2014 compared with an increase of 2.
Chief executive Mark Fielding said: "The current level of negative inflation should not be used as an indication that all costs are being kept under control.
Economists expect some Gulf states to see negative inflation this year, primarily due to falling house prices.
Negative inflation implies that the average wholesale price level was lower during a given week, than it was in the corresponding week a year ago.
Even though negative inflation will mean that real earnings will be increasing, it is likely to be some time before this feeds into a strong enough change in sentiment to encourage a fullscale revival.
The negative inflation rates in the quarter placed pressure on the net interest margin as the Bank has more assets than liabilities linked to inflation.
Therefore if, as the Government has predicted, we have zero or even negative inflation, the pensioners' pay rise will be zero.
It's now trying it's best to prevent negative inflation (a possibly worse scenario), as well as rapid rises in unemployment and house repossessions.
Although compared to this time last year, average new home prices are down, this negative inflation level is the lowest it has been for almost a year, and together with the other indicators, would suggest that the market is edging towards stronger growth later this year.