What is desflation?

Deflation is the decline in the general price level of goods and services in an economy over a period of time. This phenomenon can lead to reduced consumer spending, as people anticipate lower prices in the future, which can further slow economic growth. Deflation is often associated with decreased demand, increased unemployment, and can create challenges for businesses and consumers who may struggle with debt. Central banks typically aim to maintain stable prices to avoid the negative impacts of deflation.