Deflation

Prices falling across the board, so money buys more

In detail

Deflation is the opposite of inflation: prices for goods and services keep falling. Your money buys more, which sounds good, but falling prices also shrink company revenue, and that reaches wages and jobs. Buyers postpone purchases because waiting makes things cheaper, which pulls the economy down further. Central banks fight it by easing policy to push prices back up.

Example

If something cost $1,000 last year and 980 this year, prices fell 2%.

Related terms

Inflation Easing and tightening Central bank

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For learning, not investment advice. Decisions are your own.