Economics2 min read
DeflationGerman: Deflation
Deflation is a sustained decline in the general price level across an economy.
In plain language
Falling prices may be linked to weak demand. Postponed purchases can put pressure on sales and income. Meanwhile, the real burden of debts rises if their nominal amount stays the same.
Let’s make it concrete
A basket falls from €100 to €98, a 2% price decline. Whether broad deflation is occurring depends on overall price developments.
Simplified example for illustration.Worth understanding
Lower inflation is not the same as deflation. With positive inflation, prices continue to rise.
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For further learning and reference:
Financial education for orientation. No individual investment, tax or legal advice.
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