Hi all,

from all the finance and economics books I have read so far I have come across a little portion of history on some of the world’s case studies of hyper inflation.

From the hyperinflation in Germany in the 1920s (Weimar Republic) to the currency collapse of Zimbabwe in 2008s. Currencies collapse when too much money is printed and circulated and then ultimately the people lose faith in the value of the currency, causing the drop in the purchasing power.

All our countries are exposed to inflation (i.e. increase in price of goods/services), and in some countries the central banks are instructed to keep inflation within a healthy range.

• In the EU this healthy range is considered to lie within 0% – 2%
• In South Africa, an emerging country, the range is somewhat higher at 3% – 6%

The reason why there is a strong focus for central banks to institute monetary policy that will curb inflation is a direct result of the significant debt crises that our parents/grandparents had to go through in the 1970s (or even earlier) and inflation was getting out of hand.

I thought I’d share this interesting article that I came across from a Kitco News report, where the guest discussed that they collected data from multiple different countries to measure the hyperinflationary rates.

• What this rate tells one is the amount of time it took for the currency in circulation to be doubled, thus reducing the purchasing power by half

It’s called the Hanke-Krus Hyperinflationary Table.

• https://www.cato.org/research/world-inflation-and-hyperinflation-table

If you wish to determine what the rate of inflation of your own country is you can look at the CPI (consumer-price index) or another index that is published monthly/quarterly/annually by a body of the government. However, some private individuals have criticized that this rate is not accurate and have therefore calculated the rate they believe is a more reflective rate. The reason for the distrust is because the goods & services in the CPI basket were sometimes changed and thus no longer provide a comparable amount.

If you like to track the impact of inflation yourself, this is how you can do it:

• Make a list of every good and service you use on a regular basis (i.e. specific foods, beverages, fuel, electricity meterage, etc.) and include a picture so you remember to use the same brand
  • i.e. you create your own basket of basic goods and services
• Every time you go shopping and include some of those goods and services on the list, you add the price and quantities bought to determine the price p/unit.
• Do this weekly/monthly/quarterly until you reach a year
• Then you can compare for yourself what the true inflationary impact was for you
  • The CPI may be a good indicator, but our baskets are different and therefore the inflationary impacts for all of us may be different

This will require a little more admin from your side, however, it will provide you with cold hard data that was collected from your own side and not a statistician.