Disinflation

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Disinflation is a decrease in the rate of inflation. Being how much prices are increasing per unit of time, it can be expressed using the word disinflation: The slowing of the rate of inflation per unit of time.

For instance in April the rate of inflation was 4.4% and in May the rate of inflation was 4.0%. In this instance the price of goods and services is still increasing; however, it is increasing at a slower rate, 0.4% less, than a month before. It should not be confused with deflation, which is an overall decrease in prices.

Disinflation is generally considered to be a very positive state for the economy. Over the last twenty years North America has seen steady disinflation, and many credit this with the strong growth during this period. While disinflation is generally perceived as positive, it is not good for the effect to go so far as deflation, which is generally perceived to be a very negative state for an economy.