Personal Finance

What Is Deflation?

Deflation is a sustained decrease in the general price level of goods and services, meaning money buys more over time. It is the opposite of inflation. While falling prices can sound beneficial, persistent deflation can lead people to delay spending and make existing debts harder to repay.

Deflation vs. Disinflation

Disinflation means prices are still rising, but more slowly; deflation means prices are actually falling.

Measuring It

A negative annual change in a price index such as the Consumer Price Index indicates deflation.

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🔗 Related Terms

Inflation Consumer Price Index (CPI) Stagflation Purchasing Power Hyperinflation

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.