The global economic crunch has something new to teach us a word that is hardly used the word deflation.
Definition of deflation Deflation A general decline in prices, often caused by a reduction in the supply of money or credit.
Here in the Philippines deflation is hardly known, in fact the word that is most popular here is inflation.
Definition of inflation Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.
Deflation of prices here in the Philippines is a welcome event, although a dream to happen if it does it's not a good sign of economy according to some analyst.
My own analysis on deflation
In the Philippines everyone is on the lookout on items that is said to be on deflation. Juan called it bargain, sale or promo. But the ones that do this are not actually exercising deflation but on the contrary it's a marketing gimmick.
Case study 1
A business, a popular shopping mall are regularly deflating or on a most popular word on sale. They do this at the interval of 15th and 30th of every month.
The logic is that those are the pay dates of most employees both government and private, so economically speaking it's the sale dates to deflate prices.
But on close observation, the sale is only on limited items the sale never really takes place on the large scale. Most of the time sale buyers bought items that they don't really need. The items are decided not as a need but on price.
Case study 2
A business, a popular fast food restaurant has put on a low price hamburgers. This gimmick has successfully attracted people to go there and buy.
But on close observation burgers are paired with fries and a drink, so naturally a person will also buy fries even thou they don't really want fries.
Who said you should buy burgers with fries? Burger and drink is a good pair but burger and fries?
Ok maybe you like fries with burgers, for me I don't like burgers with fries. The price of burger with fries are less when bought in pair there price are high when bought individually.
So, they buy in pair for economic reason. Not because they want it.