What Is Negative Inflation

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Negative Inflation

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What Is Negative Inflation

  1. 1. Shashikant S K
  2. 2. <ul><li>Inflation in India turned negative 1.61 for the first time in 32 years but the prices of food items like fruit and vegetables, cereals and oil were still higher than last year. </li></ul><ul><li>Stock markets immediately welcomed the development and jumped by about 200 points </li></ul><ul><li>Food articles were costlier by 8.7 per cent from the comparable week last year as pulses moved up 17 per cent, cereals 13.5 per cent, and fruit and vegetables 10 per cent. The dip was on account of a fall in fuel prices as international crude oil is now ruling around $70 a barrel against over $140 a barrel during the year-ago period. </li></ul>
  3. 3. <ul><li>What is negative inflation? </li></ul><ul><li>Low inflation does not mean that prices will remain low: it means that prices are rising at a slower pace than before. </li></ul><ul><li>Negative inflation can also be termed as deflation. Deflation is a fall in the price of goods and services. Deflation occurs when the inflation rate falls below zero per cent. This is the opposite of inflation. </li></ul>
  4. 4. <ul><li>There is less money (supply of money) chasing the same amount of goods and services, leading to the increase in the value of the money. </li></ul>
  5. 5. <ul><li>When the inflation rate is negative, the economy is in said to be in a deflationary period. </li></ul>

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