We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies. You can view our cookie policy and edit your settings here, or by following the link at the bottom of any page on our site.
Deflation, in contrast to inflation, is a general decrease in the price of goods and services. More specifically, it happens when the rate of inflation is less than 0% or when, over time, the value of money increases.
Deflation definition
Deflation, in contrast to inflation, is a general decrease in the price of goods and services. More specifically, it happens when the rate of inflation is less than 0% or when, over time, the value of money increases.
It’s generally accepted that a sustained period of deflation has a detrimental effect on economy, as it creates an incentive for consumers to delay spending. For example, you probably wouldn’t buy something today if you’re sure that it will be cheaper next week.
There’s also a disincentive to borrow — affecting one of the primary functions of financial markets as deflation will increase the real value of any debt over time. Alongside this, the interest payments needed to service the debt will become comparatively more expensive.
With IG
We offer a share dealing service, allowing you to buy and sell shares and ETFs via a share dealing account, ISA or SIPP.