Examples of deflation in a Sentence
Economists worry that deflation will bring the country into recession.
Recent Examples of deflation from the Web
The chase ended in Clay County when Claycomo police officers deployed a tire deflation device and arrested the driver.
As unemployment rose, as the recession kicked in, the natural-rate theory would predict inflation to collapse, possibly to the point of deflation.
At one point, officers deployed a tire deflation device in an effort to stop the driver.
That eagerness is in the early stages of quite a deflation in the offseason, however.
The switch was caught by highway surveillance cameras, and police eventually stopped the second car on the highway in Guilford by using tire-deflation devices.
This mattered a lot because of the significant price deflation at the time.
In fact, gold performed best in real terms (although only as well as Treasury bills) when there was sharp deflation.
The deflation risk has been averted but inflation is generally very contained and interest rates are still low.
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.
Financial Definition of DEFLATION
What It Is
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.
DEFLATION Defined for English Language Learners
Definition of deflation for English Language Learners
: 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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