When prices are increasing at a slower rate, i.e. when there is a fall in inflation rate, then it is known as disinflation. Disinflation could occur due to monetary policy of the central bank, a contraction in the business cycle, a recession etc. You can read about Inflation in Economy- Types of Inflation, Inflation Remedies, Effect of Inflation in the given link.
If disinflation takes place when the inflation rate is very low, then it could even lead to deflation. Deflation occurs when the inflation rate falls below 0%.
Further readings:
- Indian Economy Notes for UPSC Civil Service Exam
- Monetary Policy – Objectives, Monetary Policy Committee, Instruments of Monetary Policy
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Related Links |
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Wholesale Price Index (WPI) – An Overview, Differences with CPI – Indian Economy Notes |
Consumer Price Index (CPI) – Types of CPI, Calculation of CPI – Indian Economy Notes |
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