In addition, if future prices are to decline, they will become more inclined to defer consumption as much as possible. They will be better off if they buy after prices decline. If consumption is restrained in such a manner, firms will be forced to reduce the prices of their products and services.
As a result, a vicious cycle of a decline in prices, a decrease in sales and profits, a restraint in wages, a slump in consumption, and a decline in prices will continue. What is important here is that both firms and households are acting rationally as respective economic entities.