6 Disinflation Examples in History
                     6 Disinflation Examples 
in History
The economic change is subject to 
many factors such as shortage of 
specific goods, strikes by the 
workforce, or companies being 
unable to meet the demand. All the 
factors, depending on their intensity, 
contribute to significant or marginal 
economic changes. Additionally, 
policies created by the authorities 
are also a governing factor when it 
comes to economic change. 
Inflation and deflation of an 
economy are also observed 
because of these factors; however, 
disinflation can also occur as a 
result.
What is Disinflation?
With so many similar-sounding words being used in the world of economics, it is easy to 
understand why sometimes people get confused between two terms, such as deflation and 
disinflation. Fortunately, it is easy to understand the difference between these two. In 
deflation, a gradual or abrupt decrease in the general price of goods and services is observed. 
However, in disinflation, the price of goods and services is not dropped, instead, the rate by 
which the general prices of goods and services are increased slows down. Simply, the slowing 
of inflation is called disinflation. There are two primary causes of disinflation: money supply 
and the business cycle. In the former, the supply of money is restricted within an economy, 
whether it be because of tight monetary policies or other factors. For instance, making it 
difficult to access money can result in a significant drop in demand, consequently causing 
disinflation. The second reason is the business cycle during a recession. Unsurprisingly, 
people significantly buy less in such times, causing companies to become intensely 
competitive, as they can no longer charge high prices. Interestingly, the interest rates during 
the period of disinflation are dropped as well, meaning people who have their money saved in 
banks, will receive a minuscule interest back.
Disinflation Examples in History
1. India
The economy of India has been facing steady inflation since 2000. From 2000 to 
2004, the average consumer price index was 4 percent, as this was the time when 
industries were advancing in the country. As time progressed, the CPI only kept 
rising. According to the statistics, the CPI averaged 9 percent from 2006 to 2013. 
Although inflation was increasing, it was expected, and economists were looking 
forward to another increase of at least 5 percent in the CPI. However, the CPI peaked 
at 12 percent by the end of 2013 with only a 3 percent increase in inflation, followed 
by a massive collapse of the CPI level to 4.3 percent in 2014. This disinflation from 5 
percent to 3 percent was a shocking trend for economists in India. One of the reasons 
economists believe behind this disinflation was the hoarding of physical assets during 
the peak of inflation. People were holding onto assets like gold, and not using it, 
causing a slowed inflation. Another major factor that contributed to this disinflation 
was the collapse of global oil prices from 2014 to 2015.
2. The United States
The United States has experienced its fair share of economic ups and downs, from the 
roaring twenties, an era of prosperity to the great recession of 2008 with collapsed 
banking and housing system. As for disinflation, the longest disinflation in the history of 
the US was from 1980 to 2015. Interestingly, both the 80s recession and the great 
recession were within this period. Following the Second World War, the US was 
experiencing inflation, and from the 1970s, inflation was massive, also known as the 
great inflation with an increase in prices by 110 percent. However, by the end of the 
1970s, the disinflation occurred, as the prices only rose by 59 percent in 1980, and by the 
end of the 1990s, prices were increasing by 32 percent. Finally, the prices rose 
marginally by 27 percent and 9 percent from the early 2000s until 2015. Economists state 
that this prolonged disinflation occurred because of aggressive monetary policies.

3. The United Kingdom
Similar to the United States, the United Kingdom is considered one of the leading 
economies in the world; however, it also had its fair share of troubling times. As for 
the disinflation rate, the United Kingdom faced a concerning percentage amidst 
the coronavirus pandemic. The inflation rate of the United Kingdom fell from 1.5 
percent in March 2019 to 1 percent in April 2019, and finally, the growth slowed to 
a sluggish pace of 0.8 percent in January 2020. Unlike other nations that 
implement aggressive monetary policies to induce disinflation, the government of 
the United Kingdom is struggling to increase its inflation rates. Another disinflation 
occurred in the United Kingdom from 2013 to 2016, as the inflation rates fell from 
5 percent to 4 percent, then, to 1 percent.
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