1. The release, or escape, of air or gas from something, resulting in its shrinking or collapsing: Deflation inevitably happens when a bike's tire runs over a big nail and is punctured!
2. A sudden loss of confidence, self-assurance: Sally's mother could see deflation all over her daughter's face when she told her mother that she received a very bad grade in the last German test.
3. A persistent decrease in the level of consumer prices or a persistent increase in the purchasing power of money because of a reduction in available currency and credit: The population was caught up in a time of deflation and the unemployment rate as very high.
4. In geology, the erosion of soil by the wind: Deflation is the mechanical process of sand, dust, or rocks, for example, being ground down, worn away, or even removed by the wind.

Deflation, an economic inconvenience or a serious problem

Economic deflation refers to 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 by people for products in the various economic areas.