What is deflation? The only guide you need to read
Deflation is a sustained decrease in the general price level of goods and services, increasing the purchasing power of money. While lower prices seem beneficial, deflation often signals economic weakness. It can lead to a harmful cycle where consumers delay purchases, businesses reduce production and cut jobs, and debt becomes more burdensome. Central banks actively combat deflation using monetary policy tools to avoid this deflationary spiral and maintain stable, low inflation, which is generally considered healthier for an economy.
