What Is Deflation?
Deflation is a lasting fall in the general price level.
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In this lesson you learn to
- Define deflation and tell it apart from disinflation
- Explain why waiting to buy and fixed debts make falling prices a risk
- Work through a price and debt example with a 10 percent fall
- Place deflation in history: United States 1929 to 1933, Japan 2000 to 2012
Check yourself: sample questions
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1.What is deflation?
Deflation is a lasting fall in the general price level.
2.True or false: disinflation means prices actually fall.
Disinflation is slower inflation; deflation is falling prices.
3.Between 1929 and 1933, by about how much did average US consumer prices fall?
Between 1929 and 1933, average US consumer prices fell by about a quarter.
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Sources (6)
- Cassandra Marks: Inflation, Disinflation and Deflation: What Do They All Mean? (St. Louis Fed Open Vault, 23.8.2023)
- Federal Reserve Bank of Cleveland: Deflation vs. disinflation (30.9.2026)
- Federal Reserve Bank of Minneapolis: Consumer Price Index, 1913- (Daten BLS, CPI-U, 1982-84=100)
- Irving Fisher: The Debt-Deflation Theory of Great Depressions, Econometrica 1(4), Okt. 1933, S. 337-357 (FRASER, St. Louis Fed)
- Statistics Bureau of Japan: 2010-Base Consumer Price Index, 2012 Average (Report), Table 1
- Eigene Berechnung
Education only. Not financial advice.