The importance of teaching disinflation and deflation

This paper examines how introductory economics textbooks address the concept of disinflation and its distinction from deflation. While recent years have seen a dramatic decline in inflation rates, a phenomenon known as disinflation, public understanding of this concept remains limited. Disinflation is often misunderstood as falling prices, or deflation. This confusion stems from a broader misunderstanding between rates and levels. We review nine widely used principles-level economics textbooks and find that most fail to explicitly define disinflation or distinguish it from deflation. We argue disinflation should be included in introductory discussions of inflation to help clarify the difference between inflation rates and price levels. We conclude with recommendations for improving textbook treatment to enhance student comprehension of inflation, price levels, and related concepts.