A decrease in consumption growth will cause inflation to fall in the short term, the long term, in both or in neither?
The best answer for this would be that it would cause inflation to decline in the short term. If growth in consumption declines, then aggregate demand should decline in the short term. As people buy fewer things, aggregate demand declines and so do prices. However, this is not necessarily going to last. There is no way to know if the decline in consumption growth will continue into the long term. Because we do not know if this decline will continue for very long, we cannot say with any confidence that inflation will decline over the long term. Therefore, we can only say with much certainty that inflation will decline over the short term.
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