Explanation:

Disinflation is a situation in which the rate of inflation falls over a period of time. Deflation is when the overall price level in the economy falls for a period of time. Disinflation is commonly used by the Federal Reserve (Fed) to describe a period of slowing inflation and should not be confused with deflation, which can be harmful to the economy. Unlike inflation and deflation, which refer to the direction of prices, disinflation refers to the rate of change in the rate of inflation.

Disinflation is not considered problematic because prices do not actually drop, and disinflation does not usually signal the onset of a slowing economy. Deflation is represented as a negative growth rate, such as -1%, while disinflation is shown as a change in the inflation rate, say, from 3% one year to 2% the next. Disinflation is considered the opposite of reflation, which occurs when a government stimulates an economy by increasing the money supply.