deflation

noun
de·​fla·​tion | \ di-ˈflā-shən How to pronounce deflation (audio) , ˌdē- \

Definition of deflation

1 : an act or instance of deflating : the state of being deflated
2 : a contraction in the volume of available money or credit that results in a general decline in prices
3 : the erosion of soil by the wind

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Other Words from deflation

deflationary \ di-​ˈflā-​shə-​ˌner-​ē How to pronounce deflationary (audio) , ˌdē-​ \ adjective

Examples of deflation in a Sentence

Economists worry that deflation will bring the country into recession.
Recent Examples on the Web After a nearly hour-long stand-off, Wright fled in his vehicle, driving over tire deflation devices and past law enforcement. William Mansell, ABC News, "Man pleads guilty to terrorism charge after blocking Hoover Dam bridge with armored truck," 12 Feb. 2020 The combination of all these factors results in looser skin, deflation, lax tissue, with more wrinkles and lines. Dallas News, "The New Facial Aging Solution: Lift and Fill Facelift," 23 Jan. 2020 That's not a very good idea at all since negative interest rates are a warning signal of deflation, which can be as bad for an economy as runaway inflation. Stephen Moore, Washington Examiner, "The economy's unsung hero is low interest rates," 23 Jan. 2020 For me, the deflation starts around the last 24 hours of a trip. Jordan Blok, Popular Science, "Why is it so hard to go back to work after vacation?," 2 Jan. 2020 Wright’s later poems attain visionary intensities, fusing belief and deflation. Dan Chiasson, The New Yorker, "The Many Voices of Charles Wright," 4 Nov. 2019 And deflation, a nemesis in the Great Depression, makes recovery very difficult. Larry Light, Fortune, "The Global Collapse in Interest Rates May be Setting Investors Up for a Crash," 9 Aug. 2019 Japan earned its reputation as an economy adrift in the 1990s, when a popped financial bubble was followed by slow growth, deflation and low interest rates. The Economist, "Free exchange Japan’s economic troubles offer a glimpse of a sobering future," 5 Dec. 2019 This tying of the pound to gold made the pound more overvalued, lowered the trade balance and ushered in deflation and slow growth. WSJ, "The Dollar and the Future of U.S. Manufacturing," 15 Oct. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'deflation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of deflation

1891, in the meaning defined at sense 1

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Time Traveler for deflation

Time Traveler

The first known use of deflation was in 1891

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Statistics for deflation

Last Updated

12 Mar 2020

Cite this Entry

“Deflation.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/deflation. Accessed 1 Apr. 2020.

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More Definitions for deflation

deflation

noun

Financial Definition of deflation

What It Is

Deflation describes the general decline in the prices of goods and services in an economy, which in turn increase the purchasing power of money. It is the opposite of inflation, but is not the same as disinflation (which is the slowing of inflation).

How It Works

Any way you slice it, deflation is caused by a significant drop in demand. Lots of things can cause this decrease in demand: recession, tighter monetary policy, civil unrest, terrorism, or changes in laws are common triggers. Many economists believe that these causes are often accompanied by a heavy psychological element. As consumers and companies grow more pessimistic about the economy or their standard of living, they tend to hoard cash instead of spending it. Likewise, banks tend to slow their lending and companies delay their expansion plans. These reductions in spending and lending lead to a decrease in the demand for goods and services. Less demand means producers, retailers, and other sellers of goods and services must lower their prices to entice buyers.

Although less expensive goods and services may seem like a good thing for consumers, it only marks the beginning of deflation's damaging downward spiral. The following sequence describes the dangers of deflation and the dangerous cycle it can create:

Why It Matters

Although many people laud lower across-the-board prices, prolonged periods of falling prices can wreak havoc on the economy by starting a downward economic spiral, resulting in fewer jobs, less income and a potential period of recession. Because the government can have such a tremendous impact on the economy in this vein, central banks like the Federal Reserve keep a close eye on economic measurements that will alert them of the threat of deflation.

Source: Investing Answers

deflation

noun
How to pronounce deflation (audio)

English Language Learners Definition of deflation

: a decrease in the amount of available money or credit in an economy that causes prices to go down
: the act or process of letting air or gas out of (something)

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