Term

Definition

Causes

Effects

Examples

Inflation

A sustained increase in the general price level of goods and services, reducing the purchasing power of money.

Excess money supply chasing limited goods (demand-pull), rising production costs like wages or materials (cost-push), or built-in expectations of future price rises.

Erodes savings value, increases living costs, can spur economic growth if moderate but leads to instability if high; central banks often raise interest rates to control it.

In 2022, Canada's inflation hit 8.1%, raising prices for everyday items like food and fuel.

Deflation

A sustained decrease in the general price level, increasing the purchasing power of money.

Increased supply of goods, reduced demand (e.g., from high interest rates encouraging saving over spending), or technological advancements lowering costs.

Can trigger a deflationary spiral: delayed purchases lead to falling demand, business failures, layoffs, and recessions; makes debt repayment harder as asset values drop.

Japan's "Lost Decade" in the 1990s, where persistent deflation stifled growth.

Disinflation

A slowdown in the rate of inflation, where prices continue to rise but at a decreasing pace.

Tightening monetary policy (e.g., higher interest rates), improved supply chains, or reduced demand pressures.

Stabilizes the economy without causing deflation; beneficial for consumers and businesses as price pressures ease, but if too rapid, it risks tipping into deflation.

U.S. inflation dropping from 9.1% in June 2022 to around 3% by mid-2023, reflecting disinflation.

Stagflation

A combination of high inflation, slow economic growth (stagnation), and high unemployment.

Supply shocks (e.g., oil price hikes), poor policy responses, or structural issues reducing productivity while costs rise.

Reduces purchasing power and job opportunities; hard to resolve as anti-inflation measures (like rate hikes) worsen unemployment; can lead to recessions.

The 1970s oil crisis in the U.S. and Canada, with inflation over 10% and unemployment around 8-9%.

Skewflation

Uneven or skewed inflation where prices rise significantly in specific sectors or commodities while the overall price level remains stable or shows mixed trends (e.g., inflation in some areas, deflation in others).

Sector-specific supply disruptions, demand imbalances, or policy effects (e.g., agricultural shortages).

Disproportionate impact on certain consumers (e.g., low-income households hit by food price rises); can mask overall economic health and complicate policy responses.

In India during 2010-2011, food prices surged (e.g., onions and vegetables up 20-30%) while non-food items remained stable, leading to targeted inflation pressures.

Greedflation

When companies raise prices excessively beyond cost increases to boost profits, often during broader inflationary periods (a critique of corporate behavior).

Corporate opportunism exploiting market conditions like supply chain disruptions or high demand, rather than pure cost pressures.

Widens income inequality, erodes consumer trust, and prompts regulatory scrutiny; contributes to sustained high prices without corresponding wage growth.

During 2022-2023 inflation, Canadian grocery chains faced investigations for profit surges amid rising food prices.

Shrinkflation

Reducing the size, quantity, or quality of a product while maintaining the same price, effectively a hidden form of price increase.

Rising input costs, supply chain issues, or efforts to preserve profit margins without overt price hikes.

Leads to consumer dissatisfaction and perceived deception; can drive brand switching or reduced loyalty.

Cereal boxes or chip bags shrinking by 5-10% in size (e.g., from 400g to 380g) while priced the same, common in 2022 amid global supply issues.