Todays poll

[morsing]

I'm having a bit of a discussion with a friend regarding inflation (not tyres, money :) ).

He claims that inflation can go down (i.e. the inflation *rate* is negative) and yesterday he told me that an economics teacher at his school had confirmed this. I'm pretty sure he didn't ask the question correctly but I'd like to know what you think before I take this any further (better safe than sorry :) ).

So the poll starts... now!!

[morsing]

Well, I've done some researching now and it seems like I've lost this one :(
I found several countries with negative inflation, Argentina, Macau (whatever that is, etc.).

But their economy must be totally chaotic?!? What exactly does it mean??

[Mav_UK]

I beleive that Japan is suffering from this at the moment as well (although I am not totally sure on this). Macau is in China a believe - they have a very good race track there.......

Infaltion is a result of the Supply / Demand curve (setting your prices where you get the optimum demand). As this drops across the country and a wide range of items you get negative inflation.

At least thats what I can remember, I last did this in school 8 years ago (god I feel old now!)

Stu

[morsing]

It is but they correctly call it deflation, not negative inflation:
http://www.boj.or.jp/en/press/koen077.htm

I suppose you could say it's the same thing but deflation would be the correct thing to call it.