Disinflation

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Disinflation

A decrease in the rate of inflation.

Disinflation

A situation in which the inflation rate decreases, but does not reverse. For example, disinflation occurs when the inflation rate goes from 5% to 2%. Importantly, it is not deflation when the inflation rate becomes negative. Disinflation is considered a normal and healthy part of a business cycle.

disinflation

A slowdown in the rate of inflation. A drop in the inflation rate from 3% in one year to 2% in the next year is an example of disinflation. On an overall basis, disinflation is good for security prices, but it can be painful for individual companies that have made investment and borrowing decisions based upon a belief that a high rate of inflation would continue. See also inflation.

Disinflation.

Disinflation is a slowdown in the rate of price increases that historically occurs during a recession, when the supply of goods is greater than the demand for them.

Unlike deflation, however, when prices for goods actually drop, disinflation prices do not usually fall, but the rate of inflation becomes negligible.

disinflation

a fall in the general price level, frequently accompanied by a reduction in the level of national income (DEFLATION). A disinflation is often deliberately brought about by the authorities in order to combat INFLATION and to eliminate a BALANCE OF PAYMENTS deficit. Instruments of disinflationary policy include fiscal measures (e.g. tax increases), monetary measures (e.g. higher interest rates), and prices and income controls. See FISCAL POLICY, MONETARY POLICY, PRICES AND INCOME POLICY, INFLATIONARY GAP, INTERNAL-EXTERNAL BALANCE MODEL.
References in periodicals archive ?
A look at survey measures of inflation expectations from three and six months after the announcement of QE2 show that disinflationary pressures abated after the program's introduction.
In the near term, real wages and consumer spending will be boosted by the disinflationary effect of the oil price shock.
Bundesbank stalling on quantitative easing allowed the disinflationary process to proceed unabated when it should have been cut short.
Governor Raghuram Rajan said in his policy statement that RBI will continue to closely monitor inflation developments, and remains committed to the disinflationary path of taking Consumer Price Index (CPI) inflation to 8 per cent by January 2015 and 6 per cent by January 2016.
The move was intended to set the economy securely on the disinflationary path.
At the same time, we reiterate our view that both demand-side and supply side disinflationary pressures have run their course in Q413.
The disinflationary trend is even more pronounced in Europe, where the inflation rate was 3% at the end of 2011; 2% at the end of 2012; and has dropped to 0.
Consumer prices are rising slowly according to the latest data, although the disinflationary pressure seen in the spring has abated.
The key disinflationary factor driving inflation towards the target tolerance band will be the lower cost-push pressure in food production.
The second round of purchases, which began in late 2010, also appears to have helped in countering disinflationary pressures, he added.
The unemployment rate suggests there is substantial slack in the labour market, yet some other indicators suggest the market is tighter and less disinflationary.
In a disinflationary/deflationary environment investing in high quality corporates debt and equity, possibly with strong balance sheets, and hard assets is the answer in this disinflationary environment.