If inflation slows from 4% to 2.5%, the episode is disinflation: prices on the chosen broad measure are still rising, but less quickly. Deflation begins only when the rate becomes negative.
Compare rates constructed from the same index, horizon, seasonal convention, and population. A monthly annualized rate and a twelve-month rate can move in opposite directions without contradiction.
The label describes a rate pattern, not its cause or cost. Attribution requires evidence on demand, supply, expectations, policy, lags, external shocks, and counterfactuals. “Disinflation” alone does not establish a soft landing.
Compare rates and levels
Suppose an index begins at 100, reaches 106 in Year 1, and reaches 109.18 in Year 2. Inflation slows from 6% to 3%, so Year 2 has disinflation. The price level still increases. The BLS CPI FAQ helps define the index and comparison basis. Use the same series and horizon for both rates. A slower twelve-month CPI increase does not establish that a particular product became cheaper, that purchasing power rose, or that one policy caused the change.
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Analyze this concept
- Identify disinflation by comparing two positive, consistently measured inflation rates and explain why the price level can still rise.
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Build on these ideas
- Inflation — Analyze
To analyze this concept: Required. Disinflation compares positive inflation rates across intervals.