Why does inflation decrease but prices continue to go up?

This is a good question and it refers to the difference between deflation and disinflation. Sometimes if inflation is at 2% and it decreases to 1.5% for example, there will still continue to be a general price level  increase of 1.5% over the next month, but the rate of increase in prices has slowed down.

Disinflation is this slow down in the increase in prices but the prices do still increase. What you're thinking of is deflation which means that inflation is negative and the price level is decreasing. Deflation is quite rare in economics but disinflation happens all the time due to slowing of the increase in the price level.

LB

Related Economics A Level answers

All answers ▸

Explain why a demerit good is overconsumed, if left to market forces.


Do subsidies to producers always correct market failure? As an essay style question.


What's the difference between PED, PES, YED, and XED?


Should the United Kingdom Government rely on market forces to redistribute income and wealth, to make it fairer or intervene to do so?