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Disinflation

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Disinflation occurs when the overall rate of inflation decreases over a given time period. With inflation being an increase of the general level of prices, disinflation means that the rate of that increase has slowed. In other words, during disinflation the prices of goods and services are still increasing, but they are increasing at a slower rate than before. Disinflation is sometimes confused with deflation. Deflation is a decrease in prices over time, while disinflation is only a decrease in the inflation rate over time. Disinflation is generally perceived as positive, and is considered to be good for the economy. However, it should be noted that disinflation can sometimes lead to deflation, which is generally perceived to be negative for the economy.



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