n lation and       siness       le       7.5
           The governments might utilise any of the       jumping inflation and running or runaway
     above or all the three measures to check and         inflation.15
     manage inflation in their day to day price
     management policy.                                   3. hyPerinflAtion
                                                          This form of inflation is ‘large and accelerating’16
        types of InflatIon                                which might have the annual rates in million or
     Depending upon the range of increase, and its        even trillion.17 In such inflation not only the range
     severity, inflation may be classified into three     of increase is very large, but the increase takes
     broad categories.                                    place in a very short span of time, prices shoot up
     1. loW inflAtion                                           The best example of hyperinflation that
     Such inflation is slow and on predictable11 lines,   economists cite is of Germany after the First
     which might be called small or gradual12. This       World War—in early 1920s. At the end of 1923,
     is a comparative term which puts it opposite to      prices were 36 billion times higher than two years
     the faster, bigger and unpredictable inflations.     earlier.18 This inflation was so severe that paper
     Low inflation takes place in a longer period and     German currencies (the Deutsche Mark) were
     the range of increase is usually in ‘single digit’.  more valuable as stove fuel than as actual money.19
     Such inflation has also been called as ‘creeping     Some recent examples of hyperinflation had been
     inflation’.13 We may take an example of the          the Bolivian inflation of mid-1985 (24,000 per
     monthly inflation rate of a country for six months   cent per annum) and the Yugoslavian inflation of
     being 2.3 per cent, 2.6 per cent, 2.7 per cent, 2.9
                                                          1993 (20 per cent per day).20
     per cent, 3.1 per cent and 3.4 per cent. Here the
     range of change is of 1.1 per cent and over a period       Such an inflation quickly leads to a complete
     of six months.                                       loss of confidence in the domestic currency and
                                                          people start opting for other forms of money,
     2. gAlloPing inflAtion                               as for example physical assets, gold and foreign
     This is a ‘very high inflation’ running in the       currency (also known as ‘inflation proof’ assets)
     range of double-digit or triple digit (i.e., 20 per  and people might switch to barter exchange.21
     cent, 100 per cent or 200 per cent in a year).14       15.   As popularised by The Economist, The Wall Street
     In the decades of 1970s and 1980s, many Latin                Journal, The Economic Times (India), etc.
     American countries such as Argentina, Chile and        16.   Collins Dictionary of Economics, p. 251
     Brazil had such rates of inflation—in the range        17.   Samuelson and Nordhaus, Economics, p. 671.
     of 50 to 700 per cent. The Russian economy did         18.     homas Sargent, he nds of our ig n ations , in
                                                                  R. Hall,       io        e        ffec (as quoted by
     show such inflation after the disintegration of the          Stiglitz and Walsh, Economics, p. 513).
     ex-USSR in the late 1980s.                             19.   Stiglitz & Walsh, Economics, p. 512.
           Contemporary journalism has given some           20.   Sachs, Jeffery, The End of Poverty, Penguin Books,
                                                                  London, 2005, pp. 92–108
     other names to this inflation—hopping inflation,
                                                            21.   Hyperin ation erodes the value of money very fast and
       11.   Samuelson and Nordhaus, Economics, p. 671.           that too at a very high scale. We may put it with an
                                                                  example, suppose the annual rate of in ation is   per
       12.   Collins Dictionary of Economics, p. 251.
                                                                  cent, money loses half its value every year. It means
       13.   Ibid.                                                that a note of Rs. 100 will have a value of just Rs. 3
       14.   Samuelson and Nordhaus, Economics, p. 671            after five years.