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Economics vocabulary · Inflation and Prices

Deflation

Meaning in economics, with examples

/diːˈfleɪʃn/nounCore term

In economics, deflation means: A general and lasting fall in the prices of goods and services across an economy; the opposite of inflation.

In Turkish: deflasyon, fiyatlar genel düzeyinde düşüş

How it is used

Rarer than inflation but feared by central banks, because falling prices can make people delay spending and make debts harder to repay. Japan's long period of mild deflation from the late 1990s is the best-known modern example.

Example sentences

  1. Japan struggled with deflation for years, with prices falling slightly and wages stagnating.

  2. Deflation sounds good for shoppers, but it can trap an economy in weak growth.

Common collocations

  • fall into deflation
  • deflation risk
  • a deflationary spiral
  • fight deflation
  • inflationA general and continuing rise in the prices of goods and services in an economy, which means each unit of money buys less over time.
  • consumer price indexA measure of the average change over time in the prices that households pay for a fixed basket of goods and services, used to calculate inflation.
  • recessionA significant fall in economic activity lasting months, with falling output, income and jobs; often defined as two quarters in a row of shrinking GDP.
  • monetary policyThe actions a central bank takes to influence interest rates, the money supply and credit in order to control inflation and support the economy.

More terms: Inflation and Prices

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This page explains English vocabulary for learners. It is not financial advice.