Deflation or disinflation ?

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Deflation or disinflation ?

The rapid fall in inflation in a context of a financial crisis and a very sharp economic slowdown raises the spectre of deflation.

The rapid fall in inflation in a context of a financial crisis and a very sharp economic slowdown raises the spectre of deflation, a situation where the decline in prices is associated with a prolonged and severe economic crisis.

However, not all declines in prices are synonymous with defl ation; the distinction must be made between a defl ationary situation and the much more positive disinflationary situation.

Source: Banque de France, Focus n°3, 22 January 2009


Published on 6 July 2011.