I went to the supermarket today and while checking out I got my total and said to the cashier "it adds up quickly". She nodded and said "hyperinflation, everything's going up." Having just last night commented on a friend's Facebook post about a flat tax, I couldn't let this go. I said "Actually inflation is low, that's the problem with a recession". She looked puzzled and said "prices are going up". I said maybe in this store, and that's why they stopped their loyalty card program (she nodded at that too), but overall in the economy inflation is low."
So I had to look. Here I tried using FRED to get a graph going back 10 years. My problem with FRED is that as an economics layman it's always hard to find the right series for the concept I want. I typed in "inflation and got back a bunch of CPI variants, which I've heard of. I looked at a recent Krugman op-ed, Not Enough Inflation and he pointed me at PCE, "And, at this point, inflation — at barely above 1 percent by the Fed’s favored measure — is dangerously low." So I included PCE in the graph. I also know that both of these have two versions, one that includes everything and one that excludes food and energy prices. The rationale is these two items fluctuate in price a lot (due to oil spills, droughts, bees dying off, wars in the middle east, etc.), so it's easy to get false readings on short terms. I graphed CPI in blue and PCE in red and put the excluding food and energy versions in solid and bold and the all item variants in dotted lines. You can see the fluctuations but the means come through.
What about food prices? In one of many posts, Krugman recently included graphs of the price of a gallon of milk and a loaf white bread over ten years. Milk went from $2.70 to $3.45 and bread from $1.05 to $1.40. That is a 10 year increase of 28% and 33% respectively.
So yeah, inflation is at about 1%. Horrors! So what's hyperinflation and are we anywhere close to it? Graeme Wood wrote in The Atlantic My Hyperinflation Vacation. He went to Kish an Iranian resort on the Persian Gulf on vacation because by using a hard currency like the UAE's dirhams he could enjoy a luxury vacation on the cheap. He begins with a good description of what hyperinflation is.
"Economists’ name for truly berserk runaway inflation is hyperinflation. America’s most nightmarish bout of inflation—in recent memory, at least—came and went at the end of the Carter administration, when prices rose by about 14 percent in 1980, the peak year. Hyperinflation, by contrast, is beyond nightmarish: a rise in prices of at least 50 percent a month, according to the generally accepted definition. Thankfully, it is rare. Steve Hanke, an economist at Johns Hopkins University, has documented 56 instances since 1795, ranging from a comparatively benign monthlong burst in Taiwan in 1947 (prices rose by a little more than half in that month, then the increase slowed), to a truly surreal year in Hungary in 1945–46, when at one point prices doubled every 15 hours. In Slobodan Milošević’s Yugoslavia in 1994, hyperinflation stopped only when the presses at the national mint, in Topčider, overheated to their breaking point.
The most famous recent case of sustained hyperinflation is Zimbabwe in 2007–08, when prices, at the peak, doubled every 24 hours. ‘It was the only case where the inflation completely ran its course, and the government just printed money until people just no longer used it,’ says William Masters, an economist at Tufts University. Eventually, after the inflation rate reached 80,000,000,000 percent a month, folks simply stopped showing up at the central bank to pick up Zimbabwean dollars, and the U.S. dollar and South African rand spontaneously became the country’s primary currencies."
Matthew O'Brien also in The Atlantic explains, The Hyperinflation Hype: Why the U.S. Can Never Be Weimar. "U.S. government finances might look Zimbabwe-esque, but a look back at some of history's worst hyperinflation episodes show why goldbugs' fears are completely unfounded now."
So hyperinflation is a completely different thing.