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.
Negative inflation is expected to persist through the first half of 2010 due to excess production capacity and the ongoing adjustment in the labour market.
The investment bank forecast Qatar would have negative inflation of an estimated 4.6pc this year before resuming an upward tick to a positive rate of 2.7pc next year.
Deflation (negative inflation) is also damaging to economic growth, as the experience of Japan during the 1990s illustrates.
(13) Consistent with Gavin and Mandel, negative inflation errors and positive output errors were uncovered for most of the sample.
This positive effect amounts to negative inflation from the viewpoint of high-income consumers.
On the other hand, PSA pointed out that education incurred a negative inflation rate of 1.3 percent.
In the coming year, we expect inflation to be between 1.4 and 1.6%, which is healthy against the backdrop of long-lived and negative inflation. In the next few years, it will be between 1.5 and 1.8% per annum by 2020.
Yet another in a long string of negative inflation surprises is at hand.
So don't pray for deflation, or negative inflation; pray, rather, that the inflation rate stays low, and positive.
The injection of fresh capital into the cooperative banks over the 2014-2015 period, marginally less than one-tenth of GDP, combined with a weakened economy over the past years and negative inflation, allowed public debt to peak at 108.9 per cent last year, more than twice 2008 levels.
Likewise, higher year-on-year inflation rates from non-food items; clothing and footwear, health, recreation and culture, as well as restaurant and miscellaneous goods and services--tempered the negative inflation outturn in housing, water, electricity, gas and other fuels inflation during the month.