Deflation
Also known as: economic deflation · negative inflation · price decline · price erosion · price collapse · price deterioration
- 1Deflation is a decrease in the general price level of goods and services.
- 2It results in an increase in the real value of the monetary unit.
- 3It is measured using broad price indices.
- 4Deflation signifies that currency gains purchasing power over time.
In economics, deflation is an increase in the real value of the monetary unit of account, as reflected in a decrease in the general price level of goods and services exchanged, measurable by broad price indices.
Connections1
a condition often caused by a contraction in money supply
A significant decrease in the money supply relative to the output of goods and services can lead to deflation, increasing the purchasing power of money.
Deflation is an economic phenomenon characterized by a sustained decrease in the general price level of goods and services. This process results in an increase in the real value of the monetary unit, meaning that each unit of currency can purchase more than it could previously.
Déflation au Japon à partir des années 1990.Wikimedia Commons; Floréalréal; Own work; CC BY-SA 4.0; Wikimedia Commons: Category:DeflationMisery index of Greece from 2008. Source: Greek statistical office.Wikimedia Commons; MartinD; Own work; CC BY-SA 3.0; Wikimedia Commons: Category:DeflationPrice indices for private consumption and gross domestic product JapanWikimedia Commons; Alex1011; self-made from data from Ameco-data from EU-Commission offices; CC BY-SA 3.0; Wikimedia Commons: Category:Deflation Economists measure this trend using broad price indices, which track the average change in prices over time. Unlike disinflation, which refers to a slowing rate of inflation, deflation represents a literal decline in price levels, which can have significant implications for consumer behavior, debt burdens, and overall economic stability.