What is real interest rate here and how is it different from inflation? I think you are trying to confuse the issue.
I put up a few links earlier.
Real interest rate has nothing to do with inflation and deflation.
Real interest rate has to do with the price of borrowing value (no matter in what currency).
Inflation and deflation have to do with a specific currency: it is the price change of a currency.
Real interest rate is independent of a currency. If the real interest rate is 5%, and I borrow you 20 houses during a year, it means I want an extra house back. It is the market-determined cost of putting value at disposal during a year.
It has nothing to do with inflation or deflation of a specific currency.
The nominal interest rate is the real interest rate, corrected for the expected change of price of the currency at hand. It is what you have to pay.
If the real interest rate is 5%, and I borrow you 100 eggs during a year, I expect 105 eggs back.
If the real interest rate is 5%, and I would lend $1000, and inflation is 2%, I know that next year, this $1000 is worth less, so in order to obtain really my 5% value, I have to ask you a nominal interest rate of 7%.
If there is deflation, and I know that $1000 will be worth 2% more next year, I'm happy with a nominal interest rate of 3% (because I will have my real value increase of 5%).