Countries with the Lowest Inflation

Updated July 10, 2020 | Infoplease Staff

Too Little of a Bad Thing

Many people are aware of the risks of inflation; as the value of money decreases over time, their purchasing power decreases. When inflation outpaces wage growth (the average increase of people's paychecks over time) this can cause grave economic consequences, as people can now no longer afford the same amount of goods, and demand drops. 

What a lot of people don't know is that deflation (negative inflation) is aso usually very bad for an economy. The most pronounced period of deflation in United States history is during the Great Depression, when money increased in value by upwards of 10% each year. As money increases in value, people see an increase in purchasing power, but their debts and cumulative interest also increase in value. If someone took a loan at no interest one year, then repaid it after a 10% deflation period, they now effectively are paying back 10% more in terms of purchasing power. This has historically spelled economic disaster. 

Find out which countries have the lowest rates of inflation, and which have dipped into deflation as of 2020.