Disinflation

Disinflation is yet another very important economic concept. The term “Disinflation” refers to a fall in the inflation rates. In fact, Disinflation is expressed in terms of the escalation in the prices of inflation rates in every unit of time. A per unit of time furthering or slackening of the inflation rates comes under the purview of Disinflation. However, the two concepts of “Disinflation” and “Deflation” should not be mixed up, where Deflation means a general fall in the prices.

A fall in the rate of inflation is termed as Disinflation. Unlike Deflation, which implies a negative condition of a nation’s economy, Disinflation indicates a positive state of the economic conditions of a country. In fact, for the past one or two decades, Disinflation had been prevalent in several countries across the world, including North America. This nation had been undergoing a stable and sound Disinflation for the last 20 years or more, which is referred by many as a strong economic development during this period. However, the positive effects of Disinflation should not be allowed to persist in an economy for long. Or else, it may gradually culminate into Deflation, which is not good for the health of an economy.

As a matter of fact, the slowing down of the rate at which the prices escalate is the primary concern of the theory of Disinflation. This condition generally prevails at the time of economic depressions when there is a fall in the sales. This makes it difficult for the retail traders to sell their products to the customers in high prices.

General trends displayed by Disinflation:

Prevalence of a continuous disinflationary trend is widely noticed across the globe. In fact with passing time, this trend has become all the more prominent in several flourishing Asian economies as well as in different industrial countries all over the world. Apart from the Asian nations, the economy of United States of America is also affected by the prevailing disinflationary trends to large extents.