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Wizard01475 t1_iznqo3c wrote

Reply to comment by MasterFubar in [OC] Inflation heatmap for 44 European, other DM and EM countries by adebar

That’s exactly what I’m saying. Necessities and basic staples aside. Why do people rush to buy things if they think the price is going up? Why would anyone buy anything if they think they can get it cheaper tomorrow.

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MasterFubar t1_iznseei wrote

> Why would anyone buy anything if they think they can get it cheaper tomorrow.

Because they are consumers, not speculators.

If the price goes down, anything looks like a bargain. You see many ads saying "Now 10% off!", lower prices are always a great incentive for buying stuff. An economy with a steady deflation would have a market with continuous discounted prices.

What most people, including many economists, don't understand is that deflation is a result of economic depression. Sellers offer lower prices because they are stuck with a warehouse full of unsold items. There is a correlation between deflation and recession, but deflation is not the cause, it's an effect of recession.

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Wizard01475 t1_iznt8oa wrote

This is true for things like food and energy. But not for durable goods, luxury items, or things like houses and cars.

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