The problem is, we have deflation in very little areas, and inflation in others. Food prices in the US have certainly not deflated. Neither has the price for health insurance, automobiles, clothing, phone service, or college tuition.
Deflation is horrible for the overall economy, in that workers lose jobs and some people are afraid to spend money. But there are reasons the banksters, corrupt "investors", and government love inflation. It is a hidden tax on the citizenry.
Price deflation, in and of itself, is not harmful. It is the cause of the deflation that matters.
Price deflation caused by improvements in technology that allow more efficient production (i.e., computers over the last couple decades) is beneficial to both consumers and producers.
It is the deflation caused by government tinkering with the currency -- as is the case in Europe -- that is harmful and leads to the effects you describe.