Deflation is a word that comes from the French "deflation" and this from the English "deflation", which was formed from the Latin, composed of "de" which refers to "idea of descent or separation", the Latin verb "flare" which means "Blow" plus the suffix "cion" which equates to action and effect. Briefly, it can be said that deflation is a phenomenon contrary to inflation; Deflation is a term commonly used in economics to refer to that pluralized fall or decline in the leveling or raising of the cost or price of the goods and services that make up the family basket.
According to the international monetary fund, deflation is the decline in prices that extends or lasts for several periods, which can at least span two months. Deflation generally has as its main cause the reduction or decline in demand, the phenomenon of which represents a serious problem, which can be considered more serious than inflation, since each fall in demand would mean the fall of the economy.
Deflation and disinflation are not considered the same, because the latter is cost deceleration, that is, they continue to grow but in a less accelerated way; and on the other hand, deflation refers to the negative variation of the consumer price index.
It should be noted that deflation can create a dialogue or cycle from which it would be difficult to get out, since different companies must sell their products in order to cover each of their production costs, which is why prices fall. In such situations, such companies have to work with a low or even negative contribution margin.
