Deflation
A sustained fall in the general price level — the opposite of inflation — that can signal a collapsing demand environment.
Deflation occurs when the general price level falls persistently. While cheaper prices sound appealing, deflation is often a symptom of collapsing demand: consumers delay purchases expecting prices to fall further, corporate revenues shrink, and debt burdens grow heavier in real terms.
Central banks fear deflation because conventional monetary policy becomes less effective — cutting rates to zero still cannot stimulate spending if expectations are anchored negatively. Japan's "Lost Decades" are the textbook deflationary case study.