What is the concept of deflation in economics?

Deflation is the opposite of inflation; it occurs when the general level of prices for goods and services declines over time. While lower prices may seem beneficial to consumers, deflation can have negative consequences for the economy. It often leads to reduced consumer spending, as people anticipate that prices will continue to fall, prompting them to delay purchases. Lower demand can lead to a decrease in production, higher unemployment, and further economic contraction. Prolonged deflation is typically a sign of an economic downturn and may require government intervention to stimulate demand and prevent a deflationary spiral.