In economics, a general decline in the prices of goods and services is called deflation.
Deflation is a sustained fall in the overall price level, rather than a temporary reduction in the price of one product. It is commonly measured using broad price indexes such as the consumer price index or the GDP deflator. If prices fall across the economy, the purchasing power of money rises in general.
Deflation can create difficulties for households, firms, and governments. Consumers may delay purchases if they expect lower prices later, while borrowers must repay debts with money that is worth more than expected. Falling sales and revenues can then put pressure on wages, employment, and investment.
Deflation is different from disinflation. Disinflation means inflation is slowing, but prices are still rising. Japan experienced prolonged deflationary pressure during parts of the 1990s and 2000s, making it a major case study in modern macroeconomics.