What does deflation actually mean to the average person financially?
As a consumer, it’s great because prices are going down. But very few consumers are so completely divorced from the world of business that the same fall in prices doesn’t affect income. There is a buffer – it’s not as though salaries will fall immediately at the same rate, so it could feel as though your money buys you more (it does) – but, behind the scenes, the same deflation is damaging businesses and potentially putting jobs at risk. If that end of deflation takes hold, then the same consumers who benefit from lower prices can end up out of work and not earning at all.
