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Disinflation is a decrease in the rate of inflation.

Expanded Definition

Basically, disinflation is a slow-down in the rate of annual increase in inflation. For example, if annual inflation is running at 3.5% and decreases to 2.5%, we have disinflation. Deflation is where the rate of inflation turns from positive to negative. For example, if inflation went from 3.5% to -1%, we would have a state of deflation.

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