A deflation can be defined as an increase in the supply of a product and a decrease in the prices. In short, no one wants to pay the amount of money that herbs were selling for in the past. Demand has definitely dropped off.
As you can see from the following graph, demand began dropping around April 13th, and never fully recovered at the zero point. The projected demand is not a good sign for the herb market, but around point 26, there is hope in that the market has swayed violently to a position above 0.
I am analyzing the market, and can only speculate on the disaster. It may be that the core dependent markets of Alchemy and Inscription (one of the two, or both) are suffering, leading to a decrease in demand for herbs. It could also be that raiding guilds are using cauldrons and their own alchemists/herbalists to do their flask work. Since the beginning of Cataclysm to now, flasks have never been a profitable business.
There is hope in the mathematics of the demand tracker formula. The amount of herbs on the AH at any one time influences the demand tracker. Eventually, the number will catch up with the quantity of herbs on the market, so long as the market is consistent in its habits. This could take until next week, it could take until next year. The 14-16 day cycle of Supply over Demand and vice versa has lasted for approximately 24 days.
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