Bitcoin isn't that deflationary, and won't be at all until 2140.
When 2140 comes around, and all the bitcoin is mined, then it will only deflate at the rate which coin is "lost into the ether" from people losing their wallets, etc. I highly doubt the deflation rate will be anywhere near 1%.
Bitcoins are already rapidly deflating. The purchasing power of a Bitcoin today is a multiple of what it was a year ago. You can see this in its rapidly appreciating exchange value vis-à-vis the U.S. dollar.
When 2140 comes around, and all the bitcoin is mined, then it will only deflate at the rate which coin is "lost into the ether" from people losing their wallets, etc. I highly doubt the deflation rate will be anywhere near 1%.