Deflation

Deflation represents a sustained and general decline in the price level of goods and services across an economy, effectively increasing the purchasing power of currency. It stands in stark contrast to inflation and is often associated with a contraction in the supply of money and credit, or a significant decrease in aggregate demand relative to supply. While falling prices might seem beneficial to consumers at first glance, prolonged periods of deflation can signal deep economic troubles, leading to a complex set of challenges for businesses, governments, and individuals.