Definition of Deflation:

  1. Deflation causes the nominal costs of capital, labor, goods, and services to fall, though their relative prices may be unchanged. Deflation has been a popular concern among economists for decades. On its face, deflation benefits consumers because they can purchase more goods and services with the same nominal income over time.

  2. Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. During deflation, the purchasing power of currency rises over time.

  3. Downturn in an economic cycle caused by circumstances, or brought about by government policies. Deflation is opposite of inflation and is characterized by (1) increase in citizens purchasing power due to the falling prices, (2) decrease in wages, or slowdown in their increase, due to falling levels of employment, (3) decrease in availability of credit due to higher interest rates and/or restricted money supply, and (4) decrease in imports due to lack of demand. Governments cause deflation usually to improve their balance of payments position, and/or to prevent overheating of the economy by an accelerating rate of inflation. Deflation is caused either by increasing taxes and/or interest rates, or by cutting down on government spending. Although effects of deflation are opposite to that of inflation, certain costs (such as minimum pay) generally do not fall. And, whereas inflation may or may not result in higher levels of output and employment, significant deflation always results in lower output and employment. See also disinflation.

  4. Conversion of an economic factor (such as wages or retail prices) from a nominal amount to a real amount by canceling the effects of inflation. See also deflator.

  5. The removal of particles of rock, sand, etc. by the wind.

  6. The action or process of deflating or being deflated.

  7. Reduction of the general level of prices in an economy.

Synonyms of Deflation

Anticlimax, Let-down, Bathos, Disappointment, Disillusionment, Deflation, Decline, Setback, Reversal, Abasement, Abatement, Abridgment, Alleviation, Attenuation, Break, Breakdown, Cave-in, Cheapening, Collapse, Comedown, Contraction, Crash, Cropper, Cut, Dampening, Damping, Debasement, Decline, Decrease, Decrement, Decrescence, Deduction, Depreciation, Depression, Descent, Devaluation, Diminishment, Diminution, Disgrace, Dive, Downfall, Dump, Dying, Dying off, Embarrassment, Extenuation, Fade-out, Fall, Hangdog look, Humbled pride, Humiliation, Implosion, Languishment, Lessening, Letdown, Letup, Lowering, Markdown, Miniaturization, Mitigation, Mortification, Nose dive, Plummet, Plummeting, Plunge, Pratfall, Price cut, Price fall, Price reduction, Prostration, Put-down, Reduction, Relaxation, Sag, Sagging, Scaling down, Self-abasement, Self-abnegation, Self-diminishment, Setdown, Shame, Shamefacedness, Shamefastness, Simplicity, Slash, Slump, Smash, Stumble, Subtraction, Tailspin, Tumble, Weakening

How to use Deflation in a sentence?

  1. Deflation is the general decline of the price level of goods and services.
  2. If the lake bed became completely dry, material could have been lost through wind erosion or deflation.
  3. A time of high unemployment and deflation.
  4. Experts had predicted an economic slowdown, but store owners and shoppers still seemed caught off guard when deflation took hold at holiday time.
  5. Due to deflation and an overabundance of domestic shoe factories it was no longer necessary to buy overpriced shoes from China when people had the money to buy good quality shoes at home.
  6. The economic deflation was beneficial as far as being able to purchase goods cheaper, but wages also decreased and fewer jobs were available.
  7. Deflation is usually associated with a contraction in the supply of money and credit, but prices can also fall due to increased productivity and technological improvements.
  8. Deflation of the illusion that the 1960s were a perpetual party.
  9. Whether the economy, price level, and money supply are deflating or inflating changes the appeal of different investment options.

Meaning of Deflation & Deflation Definition