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 summary, deflation is starting to spread into lower global consumer prices, depressed wages and, to a lesser extent, softer asset prices.
BNZ's deflation forecast is in contrast with the Reserve Bank of New Zealand's forecasts when it said that consumer price index will increase 0.
Periods of deflation typically are associated with down-turns in the economy.
Clearly, global asset deflation seems to be spreading across different asset classes.
This can lead to deflation, as well as to a collapse of the bubble for asset prices.
The AS or price deflation is, or at least should be, the normal by-product of a growing economy (Selgin 1997).
The American Enterprise Institute's John Makin has repeatedly made this case, and PIMCO bond manager Bill Gross called deflation the "whisper word" among economic policymakers at Davos.
At a news conference on Tuesday, Bank of Japan Governor (BOJ) Haruhiko Kuroda showed confidence that the Japanese economy is on track toward BOJ's 2-percent inflation goal by fiscal 2015 to beat deflation.
16 ( ANI ): International Monetary Fund chief has warned about the risks to global economic recovery of deflation.
It also puts inflation into what economists generally consider to be the danger zone, which necessitates resorting to aggressive policy action to forestall the risk of outright deflation.
Helen Dickinson, director general of the British Retail Consortium, said: "The seventh consecutive month of deflation is great news for hardpressed households as Christmas gets closer, and confirms that retailers are reading current conditions well and matching the mood in their promotions and product offers.
The government acknowledged that Japan's prolonged deflation is on the verge of ending while maintaining its upbeat assessment of the overall economy for a second straight month in its monthly economic report for August released Thursday.