Prices can move in two general directions over time. If they go up, that's called inflation. If they go down, that's called deflation. (Theoretically, they could stay the same, but given the complexity of the economy, having literally stable prices for any length of time would likely prove impossible.)
So typically, we're talking about an either/or situation: either you've got inflation or you've got deflation. However, a scenario known as "biflation" can occur when both inflation and deflation are happening at the same time.
Obviously, prices for a single thing can't biflate; individual prices can only go up or down. But, if prices for some things go up while prices for other things go down, that's known as "biflation."
The term was coined in the 2000s and got traction in the period after the 2007-2008 financial crisis. In the wake of the subprime mortgage meltdown, housing markets in many regions were depressed. That meant that, on average, the housing market saw deflation for a period of time. Meanwhile, elsewhere in the economy, prices for things like crude oil and gold were rising. Hence, biflation.
In a certain sense, biflation is always happening. Even in an overall inflationary situation, there are likely to be some prices falling even as most other prices rise.
Computer prices, for instance, have fallen substantially over the past 20 years or so. New technologies and manufacturing processes, combined with competition, continue to push prices lower. However, the general trend for overall prices in the last 20 years has been for steady price increases, which is fairly typical (the Federal Reserve and any other competent central bank calibrates its monetary policy for steady, low-grade inflation).
So, computers may go down in price, but many, many other items have continuously gotten more expensive over the years. This leads to the general trend that has been steady, mild inflation.
When to pull out the term "biflation" then? The reason "biflation" got used during the post-crisis situation, and not to describe situations like falling company prices, is that housing makes up an important part of the economy. With such a sizable chunk of people's expenses and/or assets suffering sharp deflation in the post-crisis years, it had a much more dramatic economic impact than the usual dips in prices for certain products here and there.
It's one thing when you can buy the equivalent of last year's $400 computer for $375. It's another when your $300,000 house is suddenly worth $200,000, if you can sell it at all. It complicates the overall pricing situation enough that a term like "biflation" becomes appropriate, because the vanilla characterization of "inflationary" doesn't tell the whole picture as well as it typically does.
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Finance: What is Inflation: Adjusted, Hy...18 Views
finance a la shmoop what is inflation-adjusted hyper currency and
commodity no no no no no I said frozen concentrated orange juice right there
that's better commodities that's what this is frozen [milk shake]
concentrated orange juice yeah it's the same whether you buy it here at Uncle [canned orange juice]
cheapies fruit barn or from Amazon or from Safeway it's a total commodity and [barn, Amazon website, Safeway building]
when inflation hits the fan yeah like that then commodity prices are usually [inflation hits ceiling fan]
the first to react commodities you know things like oil and electricity and [oil ships, light bulbs]
roundup weed killer and the price of generic picture frames on Amazon you [weed killer, picture frames on Amazon]
know those things all right well why does commodity pricing even matter well
let's talk about inflation for a sec inflation measures the rate at which
prices of goods and services are rising and they generally rise over time the
greater the level of inflation the lower the purchasing power of your currency
well in a world of inflation taking off going up up up and the Fed raising rates [house floating up with balloons]
hoping to tamp it down down down well equities or stocks and debt or bonds [house floating down]
will get crushed while commodities should just keep going on up up up in [air balloons rising]
lockstep with inflation rates because they're basically a store of cash and
you can turn them into cash so quickly and they don't really change that way in
essence commodities are a good balance to an investment portfolio highly
exposed to oh say the stock market well what else acts this way real estate yeah
it's kind of a commodity or at least it behaves like one in the grips of [air balloons rising]
inflation oil yep gold yep what about currencies commodity well yes and no [oil rig, gold ingots, paper money]
currencies react to other currencies generally on a relative basis but they
behave very much like commodities so then if you turbocharged inflation well [different world currencies]
yes you get then hyperinflation in most times the US dollar has been considered [house rocketing out of orbit]
a relatively stable bet like think Latin American debt in a historical frame that
is the countries were swimming in debt payable in their own currency in the [world map]
1980s and much to the chagrin of the Western countries who loaned them [bags of money in western countries]
billions and billions of dollars those latin-american countries decided to run
the Xerox machine all through the night and weekend printing more and more money [money being printed]
so hyperinflation would be created and the 18 kajillion dollars owed by
Venezuela would feel instead like only a few million bucks to that country and
while the West learned a big lesson about loaning people
irresponsible with her own currency oh and there was that other little one
lesson that the West learned about punitive war reparation rules check out [world map]
1930s vimar germany's hyperinflation currency issues this wheelbarrow full of [wheelbarrow full of money]
german marks yeah at the time this picture was taken it bought a loaf of
bread and only like two glasses of juice juice juice [two orange jews turn into orange juice]
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