In the context of economics, deflation occurs when the inflation rate falls below 0%, leading to a decrease in consumer prices. This can happen due to several factors, such as reduced consumer demand, increased productivity, or a drop in the supply of money within the economy. When deflation takes place, the purchasing power of currency increases, meaning that consumers can buy more with the same amount of money. However, prolonged deflation can lead to economic stagnation, lower wages, and increased unemployment, as businesses generate lower revenues and may cut back on spending and investments.