What’s more, almost a third of those surveyed said they think they’ll pay less than they do now. It’s a common misconception that falling inflation equates to falling prices. But the two don’t always go hand in hand. Inflation vs. deflation Inflation is the rate at which prices for goods and services across an entire economy are rising over a given period of time. When inflation rises, it means you’ll have to spend more money to buy the same goods and services as you used to.
Like many central banks, including the Bank of England and the European Central Bank, the US Federal Reserve is targeting 2% annual inflation. That means global central bankers don’t actually want goods and services to get cheaper. Instead, they want prices to go up a bit more each year so that people don’t delay purchases that helps grow the economy. Dangers of deflation Deflation is in many ways more dangerous than inflation.