Why does inflation decrease but prices continue to go up?

This is a good question and it refers to the difference between deflation and disinflation. Sometimes if inflation is at 2% and it decreases to 1.5% for example, there will still continue to be a general price level  increase of 1.5% over the next month, but the rate of increase in prices has slowed down.

Disinflation is this slow down in the increase in prices but the prices do still increase. What you're thinking of is deflation which means that inflation is negative and the price level is decreasing. Deflation is quite rare in economics but disinflation happens all the time due to slowing of the increase in the price level.

LB
Answered by Luke B. Economics tutor

2372 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Does economic growth lead to economic development?


What is meant by the term 'opportunity cost'


Using the data in Extract A, calculate, to one decimal place, the percentage change in the total net trade balance in goods with the UK’s top five trade partners from February - April 2012 to February–April 2013.


Using a diagram and an example, explain what a negative externality is and why it leads to market failure.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning