Galloping inflation

Indian Economy glossary

Also called: Runaway inflation · Topic: Inflation and Index Numbers: CPI, WPI, IIP and the Deflator · NCERT: Beyond NCERT

Meaning

Galloping inflation is very high inflation, running at double-digit or triple-digit rates a year. Money loses value so fast that people lose trust in it. They rush to spend cash, or they switch to gold, land or foreign currency. Savers and people on fixed incomes are hit hardest.

Example

At 100% a year, a basket costing ₹1,000 today would cost ₹2,000 a year later. Savings kept in cash would lose half their buying power in that year.

Don't confuse with

  • Hyperinflation: this is even faster, runaway inflation, conventionally over 50% a month. Examples are Weimar Germany in 1923, Zimbabwe in 2008 and Venezuela in the late 2010s. It destroys the currency.
  • Creeping inflation: this is slow and benign, below about 3% a year.

Related concepts

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