deflation

American  

[dih-fley-shuhn] / dɪˈfleɪ ʃən /

noun

1. the act of deflating or the state of being deflated.

2. Economics. a fall in the general price level or a contraction of credit and available money (inflation ).

3. the erosion of sand, soil, etc., by the action of the wind.

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deflation British  

/ dɪˈfleɪʃən /

noun

1. the act of deflating or state of being deflated

2. economics a reduction in the level of total spending and economic activity resulting in lower levels of output, employment, investment, trade, profits, and prices Compare disinflation

3. geology the removal of loose rock material, sand, and dust by the wind

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deflation Scientific  

/ dĭ-flā′shən /

1. The lifting and removal of fine, dry particles of silt, soil, and sand by the wind. Deflation is common in deserts and in coastal areas that have sand dunes.

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deflation Cultural  

1. A decrease in prices, often stated as an increase in the value of money, related to a decline in spending by consumers. (Compare inflation.)

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Other Word Forms

• deflationary adjective
• deflationism noun
• deflationist noun
• nondeflation noun
• nondeflationary adjective
• self-deflation noun

Etymology

Origin of deflation

First recorded in 1890–95; deflate + -ion

Compare meaning

How does deflation compare to similar and commonly confused words? Explore the most common comparisons:

• disinflation vs. deflation

Explanation

In economics, when prices drop it's called deflation. Deflation makes money more valuable — prices are lower, so you can buy more with it. But deflation is also what happens to a tire if it runs over a nail. Bummer. When economists talk about inflation, they mean that prices are very high, and it takes more cash to buy things. Deflation is the opposite—it's also known as a negative inflation rate. Deflation is dangerous for the economy, and it's connected with era like the Great Depression of the 1930s. Deflation literally means "a loss of air," and you can use it that way too: "The deflation of my tires meant I wasn't going anywhere."

Example Sentences

China’s factory-gate prices exited deflation for the first time in more than three years, partly the result of higher energy costs caused by the Iran war.

From MarketWatch • Apr. 10, 2026

A surge in energy costs triggered by the war in Iran pushed up producer prices in China, snapping a streak of factory deflation in the country that lasted more than three years.

From The Wall Street Journal • Apr. 10, 2026

If that was the Fed’s goal, it could create a higher risk of deflation, which typically precedes an economic downturn.

From Barron's • Mar. 31, 2026

Not everyone is on board with his deflation view, however.

From MarketWatch • Mar. 26, 2026

I follow the same tortured trajectory over and over—from my rush of disbelieving joy to my crashing deflation.

From "Water for Elephants" by Sara Gruen

Related Words

• bankruptcy
• collapse
• decline
• downturn
• hard times
• inflation
• shakeout
• slide
• slump
• stagnation
• unemployment