When you go to the supermarket and find that the prices of goods are falling, it seems like a good thing at first glance, but economists start to sound the alarm - this could be a signal of deflation (通货紧缩).
A simple and straightforward understanding: what is deflation?
Deflation is the general fall in prices of goods and services. It sounds good because your money seems to become "valuable," and purchasing power increases. But behind this process lies a dangerous reversal of the logic of economic operation.
In contrast, инфляция (inflation) is a general rise in prices that devalues your money. Both affect the economy, but in completely different ways.
Deflation comes from: three main driving forces
1. Shrinking demand - consumers and businesses are tightening their belts.
When people expect an economic downturn, they reduce spending. Demand decreases, production becomes excessive, and businesses can only sell at lower prices. This creates a vicious cycle.