Reports Shows that it is Necessary to Differentiate between Deflation and Disinflation in 2023

By Shubhendra Anand, 04 April, 2023

With inflation report slightly hotter than expected showed that prices of consumers in the United States have risen by 6.4 percent in the past twelve months. According to the reports, it is the lowest annual increase since October 2021. Again, it is the seventh consecutive month of decreasing year -over-year inflation, even after continuing the disinflationary trend.

People are having the view, that “inflation is cooling”. But when the question arises, “will the prices be back to normal”? But it is important to find out what is the right answer to this.  To answer it, we should understand the difference between disinflation and deflation. Disinflation is happening in the global economic market currently. It means a deceleration of prices, that is the prices increases. If the overall price level has to come down then it is necessary for the inflation to drop down below zero. And this would indicate deflation.

The organisation Fed wants inflation to drop down with a goal of 2 percent inflation and not deflation. Because most of the time deflation only creates problems on its own.

According to the reports, the rate of inflation will come down quite significantly from its June 2022 records. Whereas the consumer prices continue to climb. Thus the report reveals that, the supply chain disrupts and recedes global crises. But the overall prices will always remain elevated.

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