What is inflation and deflation in economics
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Inflation: Imagine you go to the store today and buy a litre of milk packet for ₹40. Next month, when you go back, the same milk packet costs ₹42. That’s inflation – prices are going up over time, so your money doesn’t buy as much.
Deflation: Now, let’s say you buy that milk packet for ₹40, but next month, it only costs ₹38. That’s deflation – prices are going down, so your money can buy more.
Inflation means prices are going up, and your money buys less. Deflation means prices are going down, and your money buys more. Both can have big effects on how people spend money and how the economy works.