Disinflation vs Deflation Explained
Are they both good news and what’s the difference?
If inflation is the genie, then deflation is the ogre that must be fought decisively.
Christine Lagarde
Hey everyone 👋🏼
How much are you prepared to pay for olive oil?
That was the topic of conversation over dinner last week after we discovered that one of our friends had bought a brand of olive oil that had risen in price by 56% in a short space of time - she's from the Mediterranean though, so her dedication to the cause makes sense.
On a more serious note, we have all felt the effects of rising inflation and it hasn't been easy for many people.
Recently, however, things seem to be taking a positive turn. Praise be!
In March, the financial markets expected inflation to be around 3.5% a year over the next five years, but that estimate has now fallen to 2.6%.
So this week I wanted to focus your attention on two terms: disinflation and deflation.
Two terms you're likely to come across in the coming months and years, but have very different meanings and consequences.
Today, I’ll cover:
A simple …