A muffin may be worth 20c, but you need to increase the price to make a profit, pay the baker, and buy supplies. Hence the price might raise to $1.50.

Deflation is when factors decrease the price of something.

Like, if a factory purchased it’s own trucks, they wouldn’t have to rent trucks to make deliveries, hence only having to pay the drivers. and since the price of the goods were increased to compensate for the truck rental, they may be decreased.

Now, when considering the world economy, in Australia alot of people invested in American companies, the recent crisis caused the american dollar to lose value, and in compensation, the american economists lowered it’s dollars value.

Now, deflation also occurs with no profit, Australian tax money is used to subsidize the price of Drugs, a drug may be worth $45 but it will be available for $8, this generates no profit, but is a mere offset of tax money.