Deflation vs. Disinflation
Falling prices versus a slowing rate of price increases.
What is Deflation vs. Disinflation?
Deflation is a sustained decline in the general price level. It raises the real burden of debt and can deepen a recession as consumers delay purchases. Disinflation is different: prices are still rising, just more slowly. Deflation favors high-quality bonds and cash, whose fixed payments buy more.
Deflation vs. Disinflation: a worked example
Inflation falling from 6% to 3% is disinflation. Prices falling 1% a year is deflation.
What is the difference between Deflation vs. Disinflation and Inflation?
Inflation = prices rising. Disinflation = still rising, but slower. Deflation = prices actually falling.
Often confused with Inflation - see Deflation vs. Disinflation vs Inflation side by side.
More terms in Economics & Financial Reporting
Business Cycle
The recurring pattern of expansion, peak, contraction, and trough.
Leading, Coincident & Lagging Indicators
Data series that move before, with, or after the business cycle.
Currency Valuation & Exchange Rates
What one currency buys of another, and who wins when it moves.
Sovereign Debt
Bonds issued by a national government.
Trade Deficit
A country imports more goods and services than it exports.
Income Statement
Revenue, expenses, and profit over a period of time.
Balance Sheet
Assets, liabilities, and equity at a single point in time.
Statement of Cash Flows
Where cash came from and where it went: operating, investing, financing.