Is Econo-Girl crazy? No one else on Earth, even the depressive Economist magazine, is predicting deflation. Deflation is lowering prices rather than rising prices. Inflation is when prices go up.
This is why Econo-Girl goes out on the limb to predict deflation: because the de-escalation of prices has a snowballing effect. Shoppers know that if they wait, prices will be cheaper. So they wait. It is happening in the DC real estate market now. And Econo-Girl predicts that it will be seen as happening by Christmas. People will wait for prices to go down. The poor sales will prompt more prices reductions.
This prediction is for the short term only. But it all hinges on consumer belief. If they believe that prices will continue to go down and consequently wait to spend, then prices will come down to meet them.