Deflation Rate Calculator

Calculate Deflation Rate



Formula

The formula to calculate the deflation rate is:

\[ \text{DR} = \left(\frac{\text{I2} - \text{I1}}{\text{I2}}\right) \times 100 \]

Where:

What is Deflation Rate?

The deflation rate measures the decrease in the general price level of goods and services in an economy over a period of time. It is calculated by comparing the current inflation rate to a previous period's inflation rate. A positive deflation rate indicates a reduction in prices, which can impact economic activity and purchasing power.

Example Calculation

Let's consider an example:

Using the formula to calculate the deflation rate:

\[ \text{DR} = \left(\frac{5 - 2}{5}\right) \times 100 = 60 \% \]

This means that the deflation rate for this scenario is 60%.