Difference between Disinflation and Deflation

I think many times I've have mentioned the word deflation while elsewhere, they are actually using the term disinflation. They are different terms.


Disinflation means a decline in the rate of increase of the consumer price index (CPI). For e.g., Year x inflation is 3%. Year x+1 inflation is 2%. Year x+2 inflation is 1%.

Deflation means a sustained decrease of the CPI, where the annual change in the CPI is negative year on year. For e.g., Year x inflation is -0.1%. Year x+1 inflation is -1%. Year x+2 inflation is -2%.


Disinflation is already very obvious since last year. I really meant deflation, at least for Singapore. Reason is that I do not believe the global financial sector is going to pick itself by this year. I see this as a 3-4 years of consolidation and "cleaning up" for the financial sector. This means that credit will be tight while this is on-going. If credit is tight, how could the economy be booming? Highly unlikely. Demand will be down sharply.

Currently, I still see at least 2 years of negative CPI, which is the reason why I kept mentioning deflation. Singapore is too dependent on the US and EU and unfortunately, both have too much excess that will take a long time to clear.