Inflation, deflation and disinflation: What's the difference?
The Federal Reserve raised short-term interest rates this week by a quarter percentage point, bringing the central bank's benchmark rate to a range of 4.50% and 4.75%. During Jerome Powell's press conference on Wednesday, the Federal Reserve Chairman used terms like inflation, deflation and disinflation, but what do those terms actually mean for you and your money? Yahoo Finance's Brian Sozzi, Brad Smith and Julie Hyman break down the three widely used terms
For more coverage of the Federal Reserve's interest rate decision, check out:
- Federal Reserve raises interest rates another 0.25% to highest since October 2007
- The word that made stocks fall in love with the Fed: Morning Brief
For more live financial news and analysis, make sure to tune into Yahoo Finance Live
JULIE HYMAN: We heard from the Fed that disinflation was happening.
BRIAN SOZZI: Do you see disinflation?
JARED BLIKRE: Prices are not stable.
JULIE HYMAN: There's inflation, there's deflation, and there's disinflation, right? Inflation is when prices are going up.
- Real wages have declined in the face of inflation, and it means that workers are still trying to keep up.
JIM SUVA: Clothing, housing, gasoline costs.
JULIE HYMAN: Deflation is when prices are going down.
CATHIE WOOD: We've seen the deflation in the pipeline. Some of the leading indicators that caused this spike in inflation-- and we think it was primarily supply or shock induced. Some of those are unwinding.
JULIE HYMAN: Disinflation is when prices are going up at a slower pace.
JOE BRUSUELAS: We're now seeing some disinflation. That's mostly correction in the supply chain.
BRIAN SOZZI: Disinflation decoded. It's used to describe the slowing pace of inflationary pressures. Look at another way. It is a decrease in the percentage change in inflation. It is not deflation.