Examples of deflation - that is an actual fall in the price level, as opposed to disinflation, a decline in its rate of increase - could conceivably become a little more common around the world in this half-decade.
All this meant that there was a sharp change in the outlook for the economy in the closing months of last year. The Reserve Bank responded to this with a very substantial lowering of interest rates: between September last year and February this year the cash rate was reduced from 7¼ per cent to 3¼ per cent.