What does reflation mean?
Reflation is the return of a declining economy or price level to a state of growth, especially when increased money supply, public spending, or other expansionary measures are used to encourage demand. The term is particularly associated with efforts to counter deflation, in which prices fall persistently and consumers postpone purchases, contributing to recession and unemployment. Reflation may occur as a deliberate policy or describe a broader recovery in prices and activity. Although it resembles ordinary inflation, its usual meaning includes a preceding period of falling or depressed prices. In modern economic discussion, reflation is often associated with monetary policy, although fiscal measures and other forms of economic stimulus may also be involved. The word is useful because it identifies a specific phase or policy of economic recovery rather than treating all price increases as the same phenomenon.
nounA process of returning to, or deliberately creating, a condition of rising prices after a period of deflation. In economics, the term often refers to an expansionary monetary or fiscal policy intended to counter deflationary pressures.
- The return of prices to a rising trend after a period of falling or stagnant prices.
- An economic policy involving renewed monetary or fiscal expansion to counter deflation and stimulate demand.
"The government introduced a program of reflation to support demand and reduce unemployment during the economic downturn."
"Gentle reflation helped stabilize prices without producing a sharp increase in interest rates."
"The central bank considered reflation as a way to support employment and consumer spending."
Plural forms are uncommon because reflation usually denotes a single economic process or policy.
"The policy reversals included two brief reflations during the following decade."
Reflation is the economic policy of deliberately reviving prices after they have fallen—a deliberate counter to the downward spiral of deflation.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does reflation come from?
Reflation combines the prefix re-, meaning “again,” with inflation. Inflation comes from Latin inflare, meaning “to blow into” or “inflate,” from flare, “to blow.” The English term developed through the language of inflation and deflation, with reflation acquiring its distinctive economic sense of a return to inflation after deflation.
Related word forms
How reflation is actually used
Reflation is chiefly an economic and financial term. It is sometimes used loosely as a synonym for renewed inflation, but it commonly carries the implication of a response to deflationary conditions.
Easily confused with reflation
Reflation specifically refers to renewed or policy-induced price growth after deflation or a period of weak prices, whereas inflation means a general increase in prices without necessarily implying an earlier contraction.