The Key Difference Between Inflation Rate and Deflation Rate

inflation rate vs deflation rate
Feature	Inflation Rate	Deflation Rate
Definition	The rate at which the general price level of goods and services rises over time.	The rate at which the general price level of goods and services falls over time.
Effect on Prices	Prices increase, reducing purchasing power of money.	Prices decrease, increasing purchasing power of money.
Causes	Demand-pull, cost-push factors, or monetary expansion.	Reduced demand, oversupply, tight money supply.
Impact on Economy	Can stimulate spending but high inflation hurts savings and fixed incomes.	Can lead to reduced spending, lower profits, and economic slowdown.
Monetary Policy Response	Central banks may raise interest rates to control inflation.	Central banks may lower interest rates to combat deflation.
Examples	Periods of rapid price increases like the 1970s oil crisis.	Great Depression in the 1930s saw prolonged deflation.