Deflation is defined as:

A decline in general price levels, often caused by a reduction in the supply of money or credit. Deflation can also be brought about by direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending. Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy. opposite of inflation.

Having stated its definition, I shall now continue with the rest of what I observed.

Probably for the first time, Economists all over are united in their projections about the threat of Deflation in the wake of the present Global Financial meltdown.

I am no Economist but I dare say that the University of Life has taught me a thing or two about what money management and economic condition is all about.

Yesterday evening, I was at the weekend “flee market” nearby where I live. It opens from 5 in the evening till around 10 at night. I love this flea market because there is a good variety of food, fruits and lots of other items that I am able to buy at a very reasonable price.

When it is about food, there is an old woman who sells delicious Malay dishes. I have been her regular customer. Now, what happened tonight set me thinking because this has never happened before.

For the same price that I have always been paying her, last night I bought a piece of chicken cooked in thick curry gravy. But while eating it at home I discovered that there was hardly any meat in the chicken piece!!! The first thought that I had about that piece of chicken – it came from an undernourished fowl.

If it is Inflation, I would have had to pay her more for the same chicken piece. It wasn’t so. I paid her the same amount as always but there was hardly anything in the chicken piece! So, giving the old lady the benefit of the doubt, that she did not cut and cook an undernourished chicken – what would be the other reason?

In fact, I heard a few weeks ago from a food vendor whom I have personally known for several years. He bemoaned to me about the general market condition. He said that the only way for him to gainfully profit from an increasing drop in the number of his daily customers is to serve less for the same price.

Was this old woman doing the same? This is an early sign that Deflation has begun to creep in.

The economic indices are already tangible vis-à-vis Deflation as defined.

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