Economy · General financial education

Disinflation is not deflation

Disinflation means prices are still rising, but more slowly. Deflation means the general price level is falling.

In more detail

If the annual rate falls from 4% to 2%, that is disinflation. The basket is still dearer than a year earlier if the rate stays positive. The ECB explains inflation as a rise in the price level; a smaller positive rate is not a fall in prices.

Background

Deflation would be a negative inflation rate across the basket, not a single sale. Base effects can lower the annual rate without making the basket cheaper than last month. This module complements the inflation concept; it contains no forecast.

An example

A basket costs 100, then 104, then 106.08. The rate falls from 4% to 2%. The basket has become more expensive. That is disinflation, not deflation.

A common misconception

Inflation is falling, so prices are falling.

Disinflation: a slower rise while the rate is still positive. Deflation: the general price level falls.

Source: European Central Bank · Inflation. Last reviewed: 2026-11-09. Editorially reviewed on 2026-11-09. Next review 2027-11-09. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.