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Deflation is a widespread pattern of price decreases. Historically, deflation is less common that inflation, but it is also more feared because the loss of revenues of a large number of firms may result in widespread bankruptcies and decrease in economic activity (as it happened, for instance, during the great depression of the 1930's).
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Periods of deflation have been rather rare in most countries of the world. During the great depression of the 1930's, prices did go down. The consequences were quite devastating: many companies went out of business for lack of revenues. |
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