What term is used for when prices fall consistently over time, leading to negative inflation?

Deflation refers to a sustained decrease in the general price level of goods and services in an economy over time. This phenomenon implies that the purchasing power of money increases, as consumers can buy more with the same amount of currency when prices are falling. Deflation often occurs during periods of economic downturn or when demand for goods and services declines significantly, driving prices down as businesses attempt to stimulate sales.

In contrast, the other terms have distinct meanings. Recession refers to a period of economic decline typically defined by two consecutive quarters of negative growth in a country's gross domestic product (GDP). Disinflation, on the other hand, indicates a slowdown in the rate of inflation, where prices are still rising but at a slower pace. Lastly, stagnation refers to a prolonged period of little or no economic growth, which may or may not be accompanied by falling prices. In this context, deflation specifically denotes the consistent decline in prices, making it the correct term to describe negative inflation.