Price level
The average level of prices in an economy at a point in time, measured by an index.
2 min read · Reviewed September 2026
In plain words
The price level is the absolute level of prices, not the rate of change. A falling inflation rate doesn't lower the price level — it just means prices are rising more slowly. To bring the price level back down, you'd need deflation.
Frequently asked questions
Can central banks lower the price level?
In theory, yes — sustained deflation would reduce the price level. In practice, central banks do not target the price level; they target the rate of change (inflation). Intentionally engineering deflation to lower prices carries severe economic risks.
Further reading