--- title: 'Deflation vs. Disinflation: What’s Better for the Economy?' description: No one likes inflation, but be careful before wishing prices will decrease. There's a big difference between deflation and disinflation. authors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2024-05-14T15:01:11.000Z' modified: '2024-05-14T16:06:45.000Z' section: Economy and Politics tags: - inflation - News word_count: 715 canonical: https://money.com/deflation-vs-disinflation/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo Illustration of a shopping basket full of groceries on top of a long receipt](https://img.money.com/2024/05/News-Deflation-Versus-Disinflation.jpg) New inflation data comes out Wednesday. And while consumer price index updates are always closely watched, this data drop is primed to be particularly scrutinized as the Federal Reserve mulls its approach to future interest rate hikes, which will affect the U.S. economy at large. Inflation has proven sticky lately, and shoppers continue to feel the pinch on their wallets. But while you may *think* you want prices to decrease, experts say to be careful what you wish for. Deflation is when prices come down directly, and disinflation is when price increases slow down. Differentiating is key: Disinflation is typically preferable to widespread deflation because it keeps the economy functioning. Read on to learn more. ## If you owe over $10,000 in debt, a Debt Relief Program may be able to help get you back on your feet more quickly. ### Select your state to begin applying for Accredited's debt relief program. [Get Started](https://money.com/pr/u3792545ce33?ap_referrer=%2Fdeflation-vs-disinflation%2F) ## What is the difference between deflation and disinflation? It’s common knowledge that inflation isn’t quite where we — as in, the government and everyday Americans — want it to be. Amid an explosion in demand after the worst of the pandemic, inflation surged to a record 9.1% in June 2022. That’s way higher than the 2% long-run target the Federal Reserve aims for. Thanks in no small part to the Fed’s rate hikes over the past couple years, the massive price increases have abated. As of March, [inflation](https://money.com/inflation-march-2024/) had reached 3.5%. What’s been happening is so far disinflation, according to [Jadrian Wooten](https://www.jadrianwooten.com/), an economist at Virginia Tech. With disinflation, prices are still going up... but slower than before. He says deflation, on the other hand, is something “very different.” [By definition](https://www.stlouisfed.org/open-vault/2023/august/explaining-inflation-disinflation-deflation), deflation is when the price level of goods and services sees a sustained decrease. “It’s really important to recognize that deflation is not normally a good thing,” Wooten adds. In fact, Jared Bernstein, chair of the U.S. Council of Economic Advisers, told Money in March that analysts don't want to see a broad deflation of the price level across the economy “because the only way that happens is if the bottom falls out.” Wondering what that looks like? Unfortunately, we already know. ## Impact of deflation During the Great Depression, the unemployment rate passed 25%. The consumer price index decreased by over 25% between 1929 and 1933. In 1932, the [rate of deflation](https://www.frbsf.org/research-and-insights/publications/economic-letter/2009/03/risk-deflation/) in the U.S. reached 10%. In particular, that deflation took a toll on Wisconsin farmers, who saw the average price for milk go from $2.01 to $0.89 in the span of three years. Cash-strapped and frustrated with the government, they staged milk strikes, attempting to withhold dairy from the public until prices (and therefore, their payouts) were raised. The [Wisconsin Milk Strikes](https://wi101.wisc.edu/the-wisconsin-milk-strikes-of-1933/) of 1933 got so tense that, at one point, strikers attacked dairy trucks and literally dumped out their milk on the side of the road. And that’s just one example. If the U.S. saw significant deflation today, the effects could be far-reaching. According to [one theory](https://www.stlouisfed.org/open-vault/2023/august/explaining-inflation-disinflation-deflation), people could start waiting to make purchases in anticipation that they’ll have greater purchasing power in the future, ultimately leading to sluggish economic growth and trapping the nation in a deflationary loop. “Even though we might want lower prices \[or\] we verbally say we want deflation, our wages and earnings are tied to how much things cost,” Wooten says. “And so if we really did see an economy where we got deflation — so, negative inflation rates — the corollary to that is we would also see our wages and our salaries go down.” Although widespread deflation would be rough, Bernstein clarified that *some* deflation in specific goods and services that saw their prices spike in the months/years following the pandemic would be welcomed. Think: airfare and used cars. Speaking generally, though, shoppers shouldn't be crossing their fingers for no inflation at all. Some inflation is typically good because it’s characteristic of a healthy economy. “It's sort of like saying, ‘I don't want to have a fever of 110 \[degrees\].’ And then someone might say, ‘Well, gee, would you rather have a fever of 50?’” Bernstein said this spring. “‘No: 98.6 is some heat, but it's the level of heat that I'm comfortable with.’" He added: “An economy that's generating some heat should have some inflation.” ## Reduce payments and make debt manageable with a Debt Relief program ![VISIT SITE](https://s3.consumersadvocate.org/prd/image/image/25289/medium_2e7b27ce-b30d-40a3-beef-0139ecba6b47.png) Our Partner [VISIT SITE](https://money.com/go/ec499dc8e695?bidid=4074168342&pmeta=p129-c628-u31158&ptid=666816485&ptoken=a5f806169f248391ea2e64e1cdc0f9a3) ![VISIT SITE](https://s3.consumersadvocate.org/prd/image/image/23879/medium_3847e650-29eb-411b-9b8c-05deb0d02cbc.png) Our Partner [VISIT SITE](https://money.com/go/7fc5db1e1279?bidid=4074168343&pmeta=p129-c628-u31158&ptid=666816485&ptoken=d8155bec9edc30e52a8f07897e172dfc) ![VISIT SITE](https://s3.consumersadvocate.org/prd/image/image/15565/medium_832cc4b7-74f8-4735-8fe1-6917816cbe8d.png) Our Partner [VISIT SITE](https://money.com/go/cf6f34f9af3f?bidid=4074168341&pmeta=p129-c628-u31158&ptid=666816485&ptoken=2ff9cc3952a291552b5dbcfb2cc2bbf5) ![VISIT SITE](https://s3.consumersadvocate.org/prd/image/image/22445/medium_ba73f26a-1e1e-4e49-9739-df1298783de6.png) Our Partner [VISIT SITE](https://money.com/go/ca0b69680b75?bidid=4074168347&pmeta=p129-c628-u31158&ptid=666816485&ptoken=5849eaeab5caed8ea40fd43c50a3b967) ![VISIT SITE](https://s3.consumersadvocate.org/prd/image/image/9246/medium_94931930-28cf-46b5-b09d-683979caec81.png) Our Partner [VISIT SITE](https://money.com/go/a0e8ba933e14?bidid=4074168344&pmeta=p129-c628-u31158&ptid=666816485&ptoken=e19be1a9eab2b44b63f52ba1371d5cda) ![](https://s3.consumersadvocate.org/prd/image/image/25289/medium_2e7b27ce-b30d-40a3-beef-0139ecba6b47.png) If you owe over $20,000 or more, Freedom Debt Relief can help you get back on your feet! [Get Started](https://money.com/pr/u5c2defb44d4?ap_referrer=%2Fdeflation-vs-disinflation%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/deflation-vs-disinflation/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Inflation", "item": "https://money.com/inflation/" }, { "@type": "ListItem", "position": 4, "name": "Deflation vs. Disinflation: What’s Better for the Economy?" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/deflation-vs-disinflation/#webpage", "url": "https://money.com/deflation-vs-disinflation/", "name": "Deflation vs. Disinflation: What’s Better for the Economy?", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-05-14T15:01:11.000Z", "mainEntity": { "@id": "https://money.com/deflation-vs-disinflation/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/deflation-vs-disinflation/#breadcrumb" }, "dateModified": "2024-05-14T16:06:45.000Z" }, { "@type": "NewsArticle", "headline": "Deflation vs. Disinflation: What’s Better for the Economy?", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/05/News-Deflation-Versus-Disinflation.jpg", "width": 1440, "height": 960, "caption": "News-Deflation-Versus-Disinflation" } ], "author": [ { "@type": "Person", "name": "Julia Glum", "url": "https://money.com/author/julia-glum/", "@id": "https://money.com/author/julia-glum/#author", "description": "Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. ", "image": "https://img.money.com/2021/10/a_julia-glum.jpg?quality=85&w=400&h=440&crop=1", "email": "julia.glum@money.com", "jobTitle": "Managing Editor", "alumniOf": "University of Florida", "subjectOf": [ { "@type": "WebPage", "url": "https://www.newsweek.com", "name": "Newsweek" }, { "@type": "WebPage", "url": "https://www.ibtimes.com/", "name": "International Business Times" }, { "@type": "WebPage", "url": "https://www.cbsnews.com/news/home-office-tax-deduction-who-qualifies/", "name": "CBS News" }, { "@type": "WebPage", "url": "https://www.goodmorningamerica.com/living/story/coupon-queen-woman-tik-tok-share-tips-couponing-66302189", "name": "Good Morning America" }, { "@type": "WebPage", "url": "https://www.wusa9.com/video/entertainment/television/programs/great-day-washington/tips-to-being-better-with-money-in-2021/65-a5b83e05-73ba-4d60-b9a8-1d47f9ac6018", "name": "WUSA9" }, { "@type": "WebPage", "url": "https://pix11.com/news/coronavirus/rebound/making-ends-meet/millenials-taking-biggest-financial-hit-from-pandemic/", "name": "Pix 11" }, { "@type": "WebPage", "url": "https://www.nytimes.com/2019/09/10/opinion/active-shooter-drill-schools.html", "name": "The New York Times" }, { "@type": "WebPage", "url": "https://mashable.com/article/forrest-fenn-treasure-found", "name": "Mashable" }, { "@type": "WebPage", "url": "https://www.washingtonpost.com/news/post-nation/wp/2014/08/13/theres-an-app-for-that-authorities-say-man-asked-siri-for-help-dumping-body/", "name": "The Washington Post" }, { "@type": "WebPage", "url": "https://www.cnbc.com/2020/06/08/treasure-buried-by-forrest-fenn-finally-found-after-10-years.html", "name": "CNBC" }, { "@type": "WebPage", "url": "https://www.politico.com/tipsheets/florida-playbook/2017/03/gillum-for-governors-rollout-stumble-florida-woman-gets-trump-shout-out-rubios-tampa-office-problems-218973", "name": "Politico" } ], "sameAs": [ "https://x.com/superjulia", "https://www.linkedin.com/in/julia-glum" ], "worksFor": { "@id": "https://money.com/#organization" } } ], "publisher": "https://money.com/#organization", "datePublished": "2024-05-14T15:01:11.000Z", "description": "No one likes inflation, but be careful before wishing prices will decrease. There's a big difference between deflation and disinflation.", "abstract": "No one likes inflation, but be careful before wishing prices will decrease. There's a big difference between deflation and disinflation.", "@id": "https://money.com/deflation-vs-disinflation/", "inLanguage": "en-US", "dateModified": "2024-05-14T16:06:45.000Z", "editor": [ { "@type": "Person", "name": "Brad Tuttle", "url": "https://money.com/author/brad-tuttle/", "@id": "https://money.com/author/brad-tuttle/#author", "description": "Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals.\r\n\r\n", "image": "https://img.money.com/2014/01/Brad-Tuttle.png?w=226&h=247&crop=1", "alumniOf": "Columbia University School of Journalism, MS", "sameAs": [ "https://twitter.com/bradrtuttle", "https://linkedin.com/in/brad-tuttle-834b225" ] } ], "wordCount": 715, "keywords": [ "inflation", "News" ], "about": [ { "@type": "Thing", "name": "Political economy", "sameAs": [ "https://en.wikipedia.org/wiki/Political_economy" ] }, { "@type": "Thing", "name": "Inflation", "sameAs": [ "https://en.wikipedia.org/wiki/Inflation" ] } ] } ] } ```