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RBI Governor Duvvuri Subbarao. | Photograph: Punit Paranjpe/Reuters
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Inflation at 20-year low; will it hurt us?

March 19, 2009

What is deflation and why is it bad for the economy?

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.

When the inflation rate is negative, the economy is in said to be in a deflationary period.

Image: RBI Governor Duvvuri Subbarao. | Photograph: Punit Paranjpe/Reuters

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