hinnakokkutõmbumine

Hinnakokkutõmbumine, also known as price deflation, is a phenomenon where the general price level of goods and services in an economy falls. This is the opposite of inflation, where prices rise. Deflation can be caused by several factors, including a decrease in the money supply, a reduction in demand for goods and services, or an increase in the supply of goods and services that outpaces demand.

When prices fall, consumers may postpone purchases, expecting prices to drop further. This can lead to a slowdown in economic activity, as businesses experience declining sales and may be forced to cut production, lay off workers, or even go out of business. Businesses may also face challenges in repaying debts, as the real value of their debt increases during deflation.

Central banks often try to combat deflation by increasing the money supply, lowering interest rates, or implementing other expansionary monetary policies. However, these measures can be difficult to implement effectively, and in some cases, deflation can be persistent and have severe negative consequences for an economy. Historically, periods of significant deflation have been associated with economic recessions and depressions. While a moderate and temporary dip in prices might not be concerning, sustained and widespread price declines are generally viewed as a sign of economic distress.