Disinflation Vs Deflation:

The terms disinflation and deflation are in common use these days, often interchangeably. Here is some clarity on distinctiveness between the two.

In common language when the prices start falling it is Deflation. It refers to a sustained fall in prices, where the annual change in the CPI is negative year after year. Usually it is precipitated by a weak economy. In almost all cases it is a side effect of collapse of the aggregate demand — a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.

While Disinflation is basically fall in the inflation rate, thus prices still continue to rise but at a lower rate than earlier. India currently can be said to be facing disinflation, where inflation is still positive, though the rate is almost nearing the zero.