Economy · General financial education

Inflation, deflation and stagflation

Inflation means prices rise. Deflation means they fall. Stagflation means prices rise while the economy is weak. This is education, not a forecast.

In more detail

Disinflation is different: the inflation rate falls but stays positive; prices rise more slowly. Deflation is a falling price level. One cheaper item is not deflation.

Background

Deflation can weigh on people who owe money, because the real burden of the debt rises, and it can delay purchases. Finmon forecasts no crisis and recommends no investments. Next to this are inflation, disinflation, nominal versus real values, the price index, and hyperinflation as history.

An example

The measured annual price-index rate is minus 1%. The general level has fallen. That is deflation, not merely a lower positive inflation figure.

A common misconception

When the inflation rate falls, that is deflation.

A falling but positive rate is disinflation. Deflation means a falling price level.

Source: Bank of England · What is deflation?. Last reviewed: 2026-10-31. Editorially reviewed on 2026-10-31. Next review 2027-10-31. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.