Deflation
A sustained fall in the general level of prices across an economy.
In plain English
A sustained fall in the general level of prices across an economy.
Deflation sounds nice: things get cheaper. The danger is the spiral. If people expect lower prices tomorrow, they delay buying today; companies sell less, cut wages and jobs, and prices fall further. Debts also get heavier, because the money you owe is worth more.
Japan battled mild deflation for years. Central banks fear it so much that they target a little inflation (usually 2%) rather than zero.
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