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TagHyperinflation

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Inflation, dollar hyperinflation with black background. One dollar bill is sprayed in the hand of a man on a black background. The concept of decreasing purchasing power, inflation.

Will Higher Prices Disarm Russia? It’s Complicated…

The effects of hyperinflation are subtle, but very real

The annual rate of consumer price inflation in Russia was 9% in February and 17% in March. For producer prices, the March number was 27%. Is Russia headed for hyperinflation, with prices increasing at triple-digit rates or more? I don’t know, but it is worth remembering what happens during hyperinflations. Many people believe that higher prices make everyone worse off. This is not true. Buyers pay more, but sellers receive more. One person’s higher price is another’s higher income. If all prices and incomes were to increase by the same amount — say 10 percent — everyone’s real, inflation-adjusted income would be unchanged. The true costs of inflation are more subtle. In practice, within every inflation, some prices increase more…