1.INFLATIONInflation is the rate of increase in prices over a period. It decreases the purchasing power of the people. Mc Aloo Tikki in #McDonalds now cost around Rs 50 but 10 years back the cost was Rs 25. Price has doubled, and this is Inflation.
2. DEFLATIONDeflation is declining in prices of goods and services. It increases the purchasing power of the people. Deflation is most dangerous for any economy as it delays actual spending due to declining price. Right now #Japan is undergoing Deflation.
3. STAGFLATIONStagflation refers to an economy that is experiencing a simultaneous increase in inflation and stagnation of economic output (slow economic growth rate and high unemployment). #Unemployment is high, and to top that price of products is also increasing.
Below is the perfect chart depicting Inflation & Deflation.
Hope you understood the terms inflation, deflation & Stagflation in the simplest of terms!