Deflation is a contraction in the supply of circulated money within an economy, and therefore the opposite of inflation. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been. This is distinct from but similar to price deflation, which is a general decrease in the price level, though the two terms are often mistaken for each other and used interchangeably. BREAKING DOWN 'Deflation' In effect, deflation causes the nominal costs of capital, labor, goods and services to be lower than if the money supply did not shrink. While price deflation is often a side effect of monetary deflation, this is not always the case.
Old English fær "calamity, sudden danger, peril," from Proto-Germanic *feraz "danger" (cf. Old Saxon far "ambush," Old Norse far "harm, distress, deception," Dutch gevaar , German Gefahr "danger"), from PIE root *per- "to try, risk, come over, go through" (perhaps connected with Greek peira "trial, attempt, experience," Latin periculum "trial, risk, danger").
Sense of "uneasiness caused by possible danger" developed late 12c. Old English words for "fear" as we now use it were ege, fyrhto ; as a verb, ondrædan .