Deflation
The opposite of inflation is deflation which is the general downtrend in prices of assets. Although inflation when moderate is often considered a positive development because it sort of encourages investments, deflation is thought by most economists to be dangerous because it can lead to a recession and even depression. Deflation is not only a temporary fall in prices but rather a sustained drop in prices of most commodities due to lower overall demand. As such, when deflation is starting, people tend to delay their purchases whether for houses or consumer items in the hope of buying them later when prices have dropped some more. Such an attitude of delaying the buying decision leads to a deflationary or downward spiral that is very hard to reverse. When demand has dropped considerably, it will idle the productive capacity of industries leading to reduced investments, reduced employment, and less income.
Deflation Cycle