Meaning & use
deflation
Last updated
Meanings
noununcountablefinance
A sustained fall in the general level of prices in an economy, usually because people and businesses are spending less.
Grammar: Not used with an or the in the economic sense: deflation is a risk, not a deflation.
Patterns
- deflation in something
- fear of deflation
Japan struggled with deflation for years, as shoppers waited for prices to drop even further.
Central banks worry that deflation can trap an economy in a cycle of weak spending.
Falling wages and deflation made it harder for families to repay their mortgages.
noununcountable
The process of letting air or gas out of something so that it shrinks or goes flat.
Grammar: Describes the process: the deflation of a tire takes only a few seconds.
Patterns
- the deflation of something
The slow deflation of the balloon left it hanging limp on the string.
A rapid deflation of the airbag is part of how it protects passengers.
He noticed the gradual deflation of the front tire after the nail went in.
Common combinations
- fall into deflation
- Several economies nearly fell into deflation after the banking crisis.
- persistent deflation
- Persistent deflation discouraged companies from investing in new factories.
- fight deflation
- The bank cut interest rates to fight deflation.
- deflation spiral
- Economists warned of a deflation spiral if demand kept shrinking.
- risk of deflation
- The risk of deflation rose when oil prices collapsed.
Synonyms and how they differ
- disinflation
- Disinflation means prices still rise but more slowly, whereas deflation means prices actually fall.
- price decline
- Price decline is a plainer phrase that can describe a single product, while deflation refers to prices across the whole economy.
- collapse
- Collapse is used for the sudden failure of one thing, such as a market, and does not carry the specific meaning of broadly falling prices.
Opposites
Word family
Commonly confused: deflation or depreciation?
deflation vs depreciation
Depreciation is a loss in value of one asset or a currency, not a general fall in the price level of an economy.
Practice
When prices across the whole economy keep falling for a long time, economists call this ______.
Choose one answer.
Deflation is a broad, sustained fall in prices. Inflation is the opposite, and depreciation refers to a single asset or currency losing value.
Make it your own
Write a sentence using “deflation”, then check it and compare it with the examples above.