― What is DeflationDeflation is a decrease in the general price level of goods and services. Deflation occurs when the annual inflation rate falls below 0% (a negative inflation rate). Inflation reduces the real value of money over time conversely, deflation increases the real value of money the currency of a national or regional economy. This allows one to buy more goods with the same amount of money over time. ∙ A general decline in prices, often caused by a reduction in the supply of [...].