DISINFLATION - ECONOMY
News: Disinflation to be slow
and long: Das
●
Recently, Reserve Bank of
India (RBI) Governor. The disinflation process in India will be slow and
protracted, with the 4% inflation target likely to be met only over the medium
term.
Key takeaways from the news:
●
The cumulative impact of
our monetary policy actions over the last one year is still unfolding and yet
to materialize fully.
Difference between disinflation and deflation:
|
Deflation |
Disinflation |
|
●
Deflation is a decrease in general price
levels throughout an economy.
●
Deflation, which is the opposite of
inflation, is mainly caused by shifts in supply and demand.
●
It can be caused by a drop in the money
supply, government spending, consumer spending, and corporate investment. |
● Disinflation
is what happens when price inflation slows down temporarily.
● Disinflation,
on the other hand, shows the rate of change of inflation over time. The
inflation rate is declining over time, but it remains positive.
● Disinflation
can be caused by a recession or when a central bank tightens its monetary
policy. |
Reflation:
●
Reflation typically
follows deflation as policymakers try to pump up economic activity either by
government spending more and/or interest rates being reduced.
Greedflation:
●
Greedflation implies that
companies exploited the inflation that people were experiencing by putting up
their prices way beyond just covering their increased costs and then used that
to maximize their profit margins. That, in turn, further fueled inflation.