DEFINITION of 'Biflation'

The simultaneous existence of inflation and deflation in an economy. Biflation, while seemingly a paradox, results when inflation in commodity assets coexists with deflation in debt-based assets. Biflation typically occurs when a fragile economic recovery causes the central bank to open up the monetary spigots in a bid to stimulate the economy. This may result in higher prices for certain assets such as energy and precious metals, and declining prices for leveraged assets such as real estate and automobiles. The creation of the term "biflation" is attributed to analyst F. Osborne Brown, who introduced it in 2003.


Biflation is a term to describe the state of the United States economy in the years after the Great Recession of 2008. The tenuous economic recovery from 2009 onwards was characterized by a high rate of unemployment and a moribund housing sector. This led the Federal Reserve to unleash trillions of dollars in monetary stimulus to jump start the economy, while pledging to keep interest rates low until 2014. As a result, while deflation was apparent in certain sectors such as housing, inflationary trends were evident in the prices of goods such as gasoline, food and gold.

  1. Inflation

    The rate at which the general level of prices for goods and services ...
  2. The Great Recession

    The steep decline in economic activity during the late 2000s, ...
  3. Economic Recovery

    A period of increasing business activity signaling the end of ...
  4. Stimulus Package

    A package of economic measures put together by the government ...
  5. Core Inflation

    A measure of inflation that excludes certain items that face ...
  6. Deflation

    A general decline in prices, often caused by a reduction in the ...
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