dealtn wrote:Nimrod103 wrote:
AIUI disinflation is just a reduction in the rate of inflation. It could be 5% to 3% or 1% to -1%. But Capital economics are predicting actual deflation of -1% over several months. So actual falls in prices, just like we have seen in the oil price.
Without reading their piece (which I used to get), or Morgan Stanley's (which I never thought much of) I wouldn't know. They may, both be predicting falling prices, but if that is just for a few months (August?) and not a persistent general fall in prices and aggregate demand in the longer term, then it isn't the kind of "deflation" that economists worry about. It maybe this is semantics about language.
If they are indeed predicting "deflation", that is interesting. But absent their research I can't really comment on it, and I wouldn't trust a journalist's interpretation of their research packaged into a newspaper article I'm afraid.
I don't think it is semantics. However, I have always taken theview that outright long term deflation is quite unlikely with a fiat currency. So the deflation of the late 1920s and 1930 ended when the UK came off the gold standard in 1931.