Imagine this scenario: the inflation rate has fallen from 4 percent to 1 percent. how would you label this change in price level?

If inflation rate fell to 4% and drops to 1%, there is a disinflation. It happens when the inflation rate slows down and makes a decrease of product prices using the gross domestic product as the basis. A deflation comes when it goes to 0%. 

It’s actually still in the u.s.