I believe the most commonly accepted definition of "hyperinflation" is a monthly inflation rate over 50%. Personally, I could go with an annual rate of 100% or more.
I believe the most commonly accepted definition of "hyperinflation" is a monthly inflation rate over 50%. Personally, I could go with an annual rate of 100% or more.
Where I come down on the subject is a rhetorical "how bad is 'bad'?"
Actual inflation--which is to say price alterations not attributable to alterations in underlying supply and demand--is by definition an economic toxin. Actual inflation is by definition a distortion of prices and therefore relative values of goods and services. Actual inflation is, in any amount, "bad".
9% inflation might not seem all that "bad" in absolute terms, but that rate of year on year inflation, reached in June of 2022, is a 357% increase in year on year inflation from where it was in January of 2020.
It is worth mentioning that inflation itself is a rate of change--it's the first derivative of the price index. When the rate of change increased fourfold in the space of two and a half years, and nearly sevenfold in the space of 18 months, that is a pretty dramatic acceleration of the inflation rate regardless of the absolute inflation measure itself.
For comparison, consider that the increases in the Bank Prime Rate from January of 2022 to August of 2023 -- 20 months -- amounted to 260% of the January 2022 Prime Rate itself. Which is to say that borrowing costs more than doubled in that time.
The interest rate itself rose from 3.25% to 8.5% -- arguably not a severe increase overall, but what that magnitude of interest rate increase did was double borrowing costs and then some.
The 10 year treasury yield rose by 317% between January 2022 and October 2023.
That's a tripling of borrowing costs, even though the 10 year yield maxes out just below 5%
None of this is to say that "hyperinflation is X" or "hyperinflation is Y". Rather, it is to say that when we assess the impact of inflation, we should remember to assess the impact of the rate of change in inflation as well.
I believe the most commonly accepted definition of "hyperinflation" is a monthly inflation rate over 50%. Personally, I could go with an annual rate of 100% or more.
Where I come down on the subject is a rhetorical "how bad is 'bad'?"
Actual inflation--which is to say price alterations not attributable to alterations in underlying supply and demand--is by definition an economic toxin. Actual inflation is by definition a distortion of prices and therefore relative values of goods and services. Actual inflation is, in any amount, "bad".
9% inflation might not seem all that "bad" in absolute terms, but that rate of year on year inflation, reached in June of 2022, is a 357% increase in year on year inflation from where it was in January of 2020.
https://fred.stlouisfed.org/graph/?g=1igOz
It's a 644% increase from the year on year inflation rate in January of 2021.
https://fred.stlouisfed.org/graph/?g=1igOV
It is worth mentioning that inflation itself is a rate of change--it's the first derivative of the price index. When the rate of change increased fourfold in the space of two and a half years, and nearly sevenfold in the space of 18 months, that is a pretty dramatic acceleration of the inflation rate regardless of the absolute inflation measure itself.
For comparison, consider that the increases in the Bank Prime Rate from January of 2022 to August of 2023 -- 20 months -- amounted to 260% of the January 2022 Prime Rate itself. Which is to say that borrowing costs more than doubled in that time.
https://fred.stlouisfed.org/graph/?g=1igPG
The interest rate itself rose from 3.25% to 8.5% -- arguably not a severe increase overall, but what that magnitude of interest rate increase did was double borrowing costs and then some.
The 10 year treasury yield rose by 317% between January 2022 and October 2023.
https://fred.stlouisfed.org/graph/?g=1igPw
That's a tripling of borrowing costs, even though the 10 year yield maxes out just below 5%
None of this is to say that "hyperinflation is X" or "hyperinflation is Y". Rather, it is to say that when we assess the impact of inflation, we should remember to assess the impact of the rate of change in inflation as well.