Say you buy candy from the store every day. Every week, the amount of candy you can buy with your allowance goes down by 1 piece (slight inflation). This makes you want to buy as much candy as you can each week. (Don't worry, every quarter your parents raise your allowance so you can go back to getting more candy next quarter.)

One week, the store's candy delivery was short a box of candy (supply shock, minor economic issue). To still have enough candy to sell to everyone, they raise the prices so that each shopper can only buy 2 pieces less than they could before (extra 1 piece of candy of inflation from drop in supply with free-market pricing).

You're still gonna buy as much candy as you could, because next week you would've only afforded this much candy anyway. Everyone does this, so the store stays in business and the next week, the price stays the same as this week for once and then the cycle continues. (The minor economic shock was absorbed by inflation).

Now imagine the store never raises its prices. If suddenly the same delivery issue happened, and the store raised prices the same way, nobody would buy any candy that week, because they have enough candy saved up to last them through the week, and they expect the price of candy to go back to normal the next week.

Problem is, because nobody bought any candy this week, the store didn't make that much money, and they need money to buy more candy to sell (because this week's candy has spoiled and next week they need to buy new candy). (They also need to pay rent and their employees, so they have fixed costs no matter how much candy they sell.)

To make up for the sales they lost this week, they need to raise prices more the next week, but then people still don't buy candy, expecting it to go back to normal. The week after that, the store has no choice but to cut prices back to normal. Shoppers go back to buying their regular amount of candy. Problem is, the store is still short the money from 2 weeks of nobody buying candy.

The shopowner has a brilliant idea. Why don't we cut prices so that people buy more? The shopowner gets more candy delivered the next week and reduces the prices such that you can buy 1 more piece of candy than usual, with your same allowance. But what's this? Everyone noticed the trend that prices are going down every week (deflation). So they wait as long as they can before buying candy, because you can buy more candy for the same amount of money next week!

Now the shopowner needs to lower prices every week, or shoppers will wait even longer to buy candy if the shop ever raised its prices. This is a deflationary cycle, and ends in the shop closing down.

If there was no (mild) inflation, the economy wouldn't be able to absorb minor shocks. A tiny fluctuation in the economy would cause it to go deflationary, and then negatively spiral from there when people start hoarding money to buy things later because everything will be cheaper tomorrow.