While both deflation and disinflation involve changes in the inflation rate, they are fundamentally different phenomena. Deflation refers to a sustained decrease in the general price level, whereas disinflation describes a slowdown in the rate of inflation.

Disinflation occurs when prices are still rising but at a slower pace, while deflation involves actual price declines. For example, if inflation drops from 5% to 2%, it is disinflation. If it drops from 1% to -1%, it is deflation.

Understanding these differences is crucial for policymakers and economists, as the appropriate responses to each phenomenon vary. Misdiagnosing disinflation as deflation can lead to ineffective or counterproductive policy measures.