Inflation vs Disinflation

Inflation is a sustained price increase.

Inflation is a complex and multifaceted phenomenon that occurs when there is a sustained increase in the general price level of goods and services in an economy over a period of time. It is measured as an annual percentage increase in the CPI. Inflation can be caused by various factors, including an increase in the money supply, economic growth, and supply chain disruptions. High inflation can have negative effects on the economy, such as reducing the purchasing power of consumers and increasing the cost of living.

Disinflation is a decrease in inflation rate.

Disinflation occurs when the rate of inflation decreases over time, but prices are still rising. It is a situation where the inflation rate is slowing down, but not yet negative. Disinflation can be caused by various factors, including a decrease in aggregate demand, an increase in productivity, and a decrease in the money supply. Disinflation is often seen as a positive development, as it can help to reduce the cost of living and increase the purchasing power of consumers.