Economicscalendar_todayLast updated: Apr 2026
What is Deflation?
/ˌdiːˈfleɪʃən/
A sustained decrease in the general price level of goods and services — the opposite of inflation. While cheaper prices sound appealing, deflation typically signals and worsens economic distress.
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Everyday Example
During deflation, people delay purchases expecting prices to fall further. If everyone does this, businesses sell less, lay off workers, and cut prices further — a self-reinforcing spiral downward.
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“Japan experienced deflation for nearly two decades (1990s–2010s) following its asset bubble collapse. The "Lost Decade" became a cautionary tale studied by every major central bank.”
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Did you know?
The Great Depression (1929–1933) saw US prices fall 10% per year. The deflation worsened unemployment and bank failures, turning a recession into an economic catastrophe.
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Key Insight
A little inflation is actually healthy — it encourages spending and investment. Central banks target ~2% inflation precisely because mild price rises keep economies moving forward.
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