A general fall in price levels caused by a decline in the supply of money or credit, or by a fall in spending.
It can lead to severe economic depression and to high levels of unemployment because of a decline in demand.
Central banks respond by cutting official interest rates close to zero and increasing the money supply in an attempt to stimulate higher prices.
Text: Reuters
Images: Getty (Unauthorised reproduction prohibited)
Also see: Inflation rate hits negative zone
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