Disinflation is a decrease in the rate of

inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

– a slowdown in the rate of increase of the general

price level The general price level is a hypothetical measure of overall prices for some set of goods and services (the consumer basket), in an economy or monetary union during a given interval (generally one day), normalized relative to some base set. ...

of goods and services in a nation's

gross domestic product Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...

over time. It is the opposite of

reflation Reflation is used to describe a return of prices to a previous rate of inflation. One usage describes an act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically the price lev ...

. If the

inflation rate In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

is not very high to start with, disinflation can lead to

deflation In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% and becomes negative. While inflation reduces the value of currency over time, deflation increases i ...

– decreases in the general

of goods and services. For example if the annual inflation rate one month is 5% and it is 4% the following month, prices disinflated by 1% but are still increasing at a 4% annual rate. If the current rate is 1% and it is the -2% the following month, prices disinflated by 3% and are decreasing at a 2% annual rate.

References

External links

Globalization and Global Disinflation
by

Kenneth Rogoff Kenneth Saul Rogoff (born March 22, 1953) is an American economist and chess Grandmaster. He is the Maurits C. Boas Chair of International Economics at Harvard University. During the Great Recession, Rogoff was an influential proponent of auste ...

, at IMF.com
What is Disinflation
by Timothy McMahon, at InflationData.com * http://www.voxeu.org/index.php?q=node/3025
investopedia.com - Disinflation
* http://economia.unipv.it/pagp/pagine_personali/gascari/disiflation_msvsirr_may_2011.pdf {{United States – Commonwealth of Nations recessions Inflation

See also

References

Further reading

External links