NOUN (3)

1. (geology) the erosion of soil as a consequence of sand and dust and loose rocks being removed by the wind;
- Example: "a constant deflation of the desert landscape"

2. a contraction of economic activity resulting in a decline of prices;

3. the act of letting the air out of something;

The Collaborative International Dictionary of English v.0.48:

deflation \deflation\ n.
   1. the act or process of deflating.
      [PJC]

   2. a fall in the average prices of goods and services; --
      usually associated with contraction of economic activity.
      Opposite of inflation. Compare disinflation.
      [PJC]

   3. the reduction of available credit or a contraction of
      economic activity resulting from or associated with a
      decline of prices.
      [WordNet 1.5]

   4. the act of letting the air out of something.
      [WordNet 1.5]

   5. (Geol.) the erosion of land structures such as sand or
      soil due to the action of wind. --RHUD
      [PJC]

WordNet (r) 3.0 (2006):

deflation
    n 1: (geology) the erosion of soil as a consequence of sand and
         dust and loose rocks being removed by the wind; "a constant
         deflation of the desert landscape"
    2: a contraction of economic activity resulting in a decline of
       prices [ant: disinflation, inflation, rising prices]
    3: the act of letting the air out of something [ant:
       inflation]

Moby Thesaurus II by Grady Ward, 1.0:

83 Moby Thesaurus words for "deflation":
   abasement, abatement, abridgment, alleviation, attenuation, break,
   breakdown, cave-in, cheapening, collapse, comedown, contraction,
   crash, cropper, cut, dampening, damping, debasement, decline,
   decrease, decrement, decrescence, deduction, depreciation,
   depression, descent, devaluation, diminishment, diminution,
   disgrace, dive, downfall, dump, dying, dying off, embarrassment,
   extenuation, fade-out, fall, hangdog look, humbled pride,
   humiliation, implosion, languishment, lessening, letdown, letup,
   lowering, markdown, miniaturization, mitigation, mortification,
   nose dive, plummet, plummeting, plunge, pratfall, price cut,
   price fall, price reduction, prostration, put-down, reduction,
   relaxation, sag, sagging, scaling down, self-abasement,
   self-abnegation, self-diminishment, setdown, shame, shamefacedness,
   shamefastness, simplicity, slash, slump, smash, stumble,
   subtraction, tailspin, tumble, weakening