Negative inflation?

According to the TV and papers we are now possibly moving into 'negative inflation.'

Is this the same as the economy contracting? Has negative inflation happened anywhere else and is this the first time it's happened here? What effect will this have on Osborne's budget, and on everybody's daily life?

Will we have to start paying the banks to keep our money in them? Can they stop us drawing it out?

According to the TV and papers we are now possibly moving into 'negative inflation.'

 

Is this the same as the economy contracting? Has negative inflation happened anywhere else and is this the first time it's happened here? What effect will this have on Osborne's budget, and on everybody's daily life?

 

Will we have to start paying the banks to keep our money in them? Can they stop us drawing it out?

Not good

Not good at all

https://en.wikipedia.org/wiki/Deflation

According to the TV and papers we are now possibly moving into 'negative inflation.'

 

Why is 2 percent the Federal Reserve’s inflation target? Because it is.

https://www.washingtonpost.com/posteverything/wp/2014/09/25/why-is-2-percent-the-federal-reserves-inflation-target-because-it-is/

It's a good job the deficit has been tackled, the debt has stopped growing, private debt is falling and interest rates haven't been stuck at near zero for years....

The economy is booming, nothing to see here, move along.....

According to the TV and papers we are now possibly moving into 'negative inflation.'

 

Is this the same as the economy contracting? Has negative inflation happened anywhere else and is this the first time it's happened here? What effect will this have on Osborne's budget, and on everybody's daily life?

 

Will we have to start paying the banks to keep our money in them? Can they stop us drawing it out?

Deflation is not necessarily bad, but often periods of deflation / low inflation can lead to economic stagnation and periods of high unemployment.

Deflation means your money will buy you more as time goes by.

The opposite of inflation which means your money buys you less as time goes by.

Japan have been in and out of deflation since 1990.

As of February 2015, here is a selection of countries experiencing price deflation, i.e. an annual rate of consumer price inflation of less than zero. The list has lengthened considerably in recent weeks and months and has become one of the hot macro-economic policy issues for teachers and students to discuss.

Rwanda (-3.1%)

Greece (-2.6%)

Hungary (-1.4%)

Cyprus (-1.3%)

Spain (-1.3%)

Poland (-1.3%)

Estonia (-1.3%)

Bulgaria (-1.0%)

Taiwan (-1.0%)

Belgium (-0.6%)

Italy (-0.6%)

Switzerland (-0.5%)

Thailand (-0.5%)

Germany (-0.4%)

Poland (-0.4%)

Latvia (-0.4%)

Sweden (-0.3%)

Ireland (-0.3%)

Singapore (-0.2%)

Denmark (-0.2%)

http://www.tutor2u.net/economics/reference/countries-experiencing-price-deflation

Deflation is not necessarily bad, but often periods of deflation / low inflation can lead to economic stagnation and periods of high unemployment.

Deflation means your money will buy you more as time goes by.

The opposite of inflation which means your money buys you less as time goes by.

It also means that the longer it goes on, the more people put off buying those items they want because they hope it'll get cheaper if they wait. That slows economic growth and leads to job losses. Brief negative inflation isn't something to worry about but if it keeps going on then it quickly becomes a trap that's difficult to escape from.

According to the TV and papers we are now possibly moving into 'negative inflation.'

 

Is this the same as the economy contracting?

Obviously not. Negative inflation just means prices are falling. This happened not too long ago when petrol prices fell. The economy is still growing.

It also means that the longer it goes on, the more people put off buying those items they want because they hope it'll get cheaper if they wait. That slows economic growth and leads to job losses. Brief negative inflation isn't something to worry about but if it keeps going on then it quickly becomes a trap that's difficult to escape from.

Too much consumption is the cause of many of the worlds problems, so people should avoid buying what they want and only buy what they need because it would be more sustainable and better for the environment.

Well it's true deflation is good for some people. Steady job, mortgage free, cash rich, capacity to save.

For most people it'd be a nightmare. Debt increasing in real terms, job losses due to people making deferred purchase decisions leading to company closures and job losses, a possible interest rate shock.

For most of us it'd be bad.

There was a well respected economists on the television a few years ago, who said the ideal inflation rate was about 1.5% which makes common sense to me.

Well it's true deflation is good for some people. Steady job, mortgage free, cash rich, capacity to save.

 

For most people it'd be a nightmare. Debt increasing in real terms, job losses due to people making deferred purchase decisions leading to company closures and job losses, a possible interest rate shock.

 

For most of us it'd be bad.

Deflation is usually followed by lower interest rates so instead of buying things you don't need pay down your debt. Job losses in manufacturing but then we don't make most of the stuff we buy. Food prices falling doesn't stop people buying food, energy prices falling doesn't stop people buying energy. House prices falling good for most people. In the long run the cost of living falls which is good for most people.

---------- Post added 12-03-2016 at 10:01 ----------

There was a well respected economists on the television a few years ago, who said the ideal inflation rate was about 1.5% which makes common sense to me.

I would think the ideal would fluctuate round zero.

According to the TV and papers we are now possibly moving into 'negative inflation.'

 

Is this the same as the economy contracting? Has negative inflation happened anywhere else and is this the first time it's happened here? What effect will this have on Osborne's budget, and on everybody's daily life?

 

Will we have to start paying the banks to keep our money in them? Can they stop us drawing it out?

Inflation is inflation. No such thing as negative inflation. It's like saying that a vehicle reversing is going negatively forward, the correct word is deflation.

---------- Post added 12-03-2016 at 11:07 ----------

Deflation is usually followed by lower interest rates so instead of buying things you don't need pay down your debt. Job losses in manufacturing but then we don't make most of the stuff we buy. Food prices falling doesn't stop people buying food, energy prices falling doesn't stop people buying energy. House prices falling good for most people. In the long run the cost of living falls which is good for most people.

 

---------- Post added 12-03-2016 at 10:01 ----------

 

 

I would think the ideal would fluctuate round zero.

I would also say, nothing, I'e around a zero average would be good.