What Is Deflation? Japan's Prices Fell in 15 of 31 Years

Japan's consumer prices fell in 15 of the 30 years from 1995 to 2024. The measure is the annual average of the Consumer Price Index (CPI), which tracks what a fixed basket of goods and services costs.

The US had one falling year in the same 30 years. Over the 111 years from 1914 to 2024 it had 13. The last was 2009.

Deflation is a fall in the general level of prices. The price level is the cost of a basket of goods and services, written as an index. Our explainer on what the CPI is covers the basket.

Inflation is the yearly percentage change in that index. Deflation is inflation below zero.

In this guide, a deflation year is a year when the annual average of the index is lower than the year before. The annual average is the mean of the twelve monthly readings. The test counts any fall, however small. It does not check that a fall lasts.

Disinflation is a slower rise in prices. The inflation rate falls, but it stays above zero. Prices still go up.

The US shows the difference. The annual average CPI rose 8.00% in 2022, 4.12% in 2023 and 2.95% in 2024. Inflation fell in each year, while prices rose in all three. That is disinflation.

Low inflation is a third case. A rate of 0.2% is low, but prices still rise. Deflation needs a rate below zero. Our guide to the types of inflation covers the others.

Yes. Negative inflation is deflation.

The US CPI is published monthly, so each month can be compared with the same month a year earlier. Our file holds 800 such comparisons from January 1960 to September 2026. The file has no October 2025 reading, so that month has no comparison.

Fourteen of the 800 were below zero. Eight fell in 2009, from March to October. Six fell in 2015. The lowest was a fall of 2.10% in July 2009. The latest reading, for September 2026, was a rise of 3.74% on September 2025.

We compared each year's annual average with the year before, from 1914 to 2024. That gives 111 changes. Prices fell in 13 of them. In 1929 the average was unchanged, so that year does not count as a fall.

Eleven of the 13 falls came before 1950. Of the 36 years from 1914 to 1949, 11 fell. Of the 75 years from 1950 to 2024, 2 fell: 1955 and 2009.

The deepest fall in the 111 changes was 10.94% in 1921. The next two were 10.30% in 1932 and 8.93% in 1931. Prices fell in four straight years from 1930 to 1933. Between the 1929 and 1933 annual averages, the price level dropped 24.6%.

Since 2009, prices have risen in every complete year to 2024. The 2015 change was a rise of 0.12%.

We took the World Bank's annual CPI inflation for Japan, which runs from 1960 to 2025. No year from 1960 to 1994 was negative. The mean of those 35 yearly rates was 5.09%.

From 1995, the picture changes. Chart 2 shows each of the 31 years, 15 of them falls.

The longest run was seven years, from 1999 to 2005. A second run covered 2009 to 2012. The mean yearly rate from 1995 to 2021 was 0.15%.

The falls were shallow. The deepest was 1.35% in 2009. Ten of the 15 were smaller than 0.5%, while three were smaller than 0.05%.

From 2022 the rate stayed above 2%. The rates for 2022 to 2025 were 2.50%, 3.27%, 2.74% and 3.17%, a mean of 2.92%.

A price level compounds the yearly rates. We set 1994 to 100 and multiplied forward by each year's rate. We did the same for the US from the annual average CPI of the Bureau of Labor Statistics. Both series are annual averages with the same base year.

Japan's level reached 102.43 in 1998, its high from 1994 to 2012. It fell to 98.44 in 2012, its low from 1994 to 2025, 3.9% below the 1998 high.

The two series come from different agencies and baskets. Chart 3 therefore compares each country with its own 1994 level and says nothing about which country is more expensive.

Each level is set to 100 in 1994. By 2024 the US level had risen to 211.6 and Japan's to 113.0. That is a rise of 111.6% for the US and 13.0% for Japan.

A recession year here is a year containing at least one month that the National Bureau of Economic Research dates as a recession. We flagged each of the 111 US years and split them by whether prices fell.

A year counts as a fall if its annual average Consumer Price Index is below the year before. A recession month is one that the National Bureau of Economic Research dates as a recession. Source: US Bureau of Labor Statistics; National Bureau of Economic Research; YX Insights

Nine of the 13 falling years contained a recession month. Four did not: 1922, 1928, 1939 and 1955. Among the 98 other years, 29 did.

A dollar bought 32.7% more goods in 1933 than in 1929. A debt fixed in dollars therefore grew 32.7% in goods terms. Wages and incomes are not in this test.

Our guide to what a recession is covers the dating.

The data here cannot rank them. The record shows two things.

In the US, falling prices and recessions often came together, mostly before 1950. In Japan, prices fell in 15 years, but by small amounts. The price level was 3.9% lower at its 2012 low than at its 1998 high.

Our explainer on why the Fed targets 2% inflation covers the policy target. Our guide to the Bank of Japan's negative rates covers Japan's policy rate.

Annual averages hide movements inside a year. The monthly comparison above shows some of them for the US.

The Japanese series is a World Bank series. The US series is from the Bureau of Labor Statistics. The baskets differ, so only each country's own changes are compared.

The recession table counts years, not causes. A recession year can have started before the price fall. The test has 111 US years and 31 Japanese years. It makes no forecast.

Deflation is a fall in the price level. It showed up in 13 of 111 US years and 15 of 31 Japanese years. In the US, 69.2% of those falling years held a recession month, against 29.6% of the others. Our guide to what causes inflation covers the opposite case, where prices rise.

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This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

Good places to start on the website:

Yes. Negative inflation is deflation. The US CPI was below its level a year earlier in 14 of 800 monthly comparisons from January 1960 to September 2026. Eight fell in 2009 and six in 2015. The lowest was a fall of 2.10% in July 2009.

Deflation is a fall in the price level, while disinflation is a slower rise. US inflation fell from 8.00% in 2022 to 2.95% in 2024, which is disinflation, because prices rose both years. Deflation needs a yearly rate below zero, as in Japan in 15 of the 31 years from 1995 to 2025.

The data here cannot rank them. In the US, 9 of the 13 years with falling prices, 69.2%, contained a recession month, against 29.6% of the 98 other years. Japan's falls were shallow, with a deepest of 1.35% in 2009. Our guide to what causes inflation covers the other case.

The last US year with falling prices was 2009, when the annual average CPI fell 0.36%. Prices rose in every complete year from 2010 to 2024. The September 2026 reading was 3.74% above September 2025. Our explainer on what the CPI is covers the index.

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