deflation

(redirected from Price Deflation)
Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia.

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 ?
Economic theory predicts that if wages are sticky in one sector, like manufacturing, and flexible in the rest of the economy, a price deflation will cause employment to drop in the inflexible sector and rise in the flexible one.
The price deflation in the BRCNielsen Shop Price Index shows overall annual deflation for nonfood items dropped to two per cent compared with 2.
As a benefit for consumers, the study sees modest price deflation as a result of better international trade and increased productivity.
Another major export, oil, is experiencing price deflation.
S and P agency said in a statement that renewed financial volatility, especially if triggered by a devaluation of the Chinese currency, could lead to more asset and price deflation, putting greater pressure on Hong Kong's corporate and financial sectors.
The net sales increase was due to incremental sales from the acquired VG's Food and Pharmacy stores (VG's) and the opening of additional fuel centers, but was partially offset by the persistent weak economic conditions, continued price deflation, competitive activity and the continued shift in mix toward more private label sales.
6% - the same as in December 2013 - when adjusted for price deflation.
Mr Coupe said: "In the second quarter, our performance has been impacted by the accelerated pace of change in the grocery market, including significant pricing activity and food price deflation in many areas.
It added that the rate of year-on-year price deflation in shoes, footwear and electrical goods slowed to 2.
Waitrose shrugged off food price deflation that has hit many rivals, with same store sales growth of up to 4.
Jessops is experiencing unusually tough trading, driven by severe price deflation in the camera market leading to pressure on revenues and margins," chief executive Chris Lang-ley said in a statement.
Market weakness was driven by marked price deflation," Woolies boss Trevor Bish-Jones said.