A decline in the rate of inflation. In other words, it is an inflationary situation in which the rate of inflation decreases, though inflation’s grip is till felt across the economy. Disinflation is a temporary slow in the rate of inflation, particularly for a short time interval. In this sense, disinflation reflects the downside rate of change in the rate of inflation.

This feature sets inflation and deflation apart from disinflation, as the former measures indicate only to the direction of prices (general level of price) in an economy during a period of time. Deflation indicates a downward direction of price level movement, while inflation depicts the opposite case (upward direction of price level movement).

Being a process of declining inflation rates (i.e. a slower rate of increase in the general price level), disinflation could temporarily lead to negative inflation rates. It often develops out of cost savings on the supply side, curbing inflation with a push-down.