Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Deflation is a sustained decrease in general price levels, increasing the real value of money but often signalling weak economic demand.
Deflation means prices fall over time — your rupee buys more, but jobs and wages may suffer in a weak economy.
Deflation increases real debt burden as nominal incomes fall while loan obligations stay fixed. Central banks typically avoid deflation through monetary easing. Prolonged deflation discourages spending as consumers delay purchases expecting lower prices.
If deflation runs at 2% annually, ₹1,000 saved today buys goods worth ₹1,020 next year in real terms, but salary cuts or job losses may offset the benefit.
India has experienced low inflation rather than sustained deflation. Occasional negative WPI prints differ from broad deflationary spirals.
Loan EMIs stay fixed in nominal terms while income and asset prices may fall, making debt harder to service in real terms.
Falling inflation can boost real returns on fixed-rate bonds as interest rates may decline, pushing bond prices up.