Is disinflation worse than inflation?

Disinflation means price levels slowing down temporarily and deflation means decrease in general price levels throughout an economy. It is not disinflation but deflation which can be worse than very high inflation. Deflation can create problems for the economy of a nation. You can read about the Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes] in the given link.

When a Central bank tightens its monetary policy, disinflation could occur. Deflation can happen when there is lack of investments, government spending, reduced consumer spending and lack of money supply.

Further readings:

  1. Inflation Targeting: Methods, Drawbacks and Benefits
  2. Consumer Price Index (CPI) – CPI and its Types [USPC Indian Economy Notes]

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