Having a lower inflation rate is not the same as having lower overall prices.Why?

lower CPI(inflation) means price levels in country decreases?


1 Answer 1


The inflation rate is the rate of change in the price level.

A lower - but positive - inflation rate (say from 3% to 2%) still results in higher prices -this is typically called disinflation, and highlights the fact that lower inflation doesn’t necessarily mean lower prices.

A negative inflation rate print (like -1%) implies the price level did actually decrease - typically referred to as deflation.


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