Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.
In November 2008, Zimbabwe experienced the second highest recorded inflation rate in history, and with that, it entered the Hanke-Krus World Hyperinflation Table. That’s when the annual inflation rate reached a peak of 89.7 sextillion (10^21) percent (see table below).
At this point, prices were doubling every 24.7 hours. During Zimbabwe’s hyperinflation episode (2007-2008), the Reserve Bank of Zimbabwe failed to report any meaningful economic data, including inflation rates. I, assisted by my capable team at The Johns Hopkins University, was the only reliable source accurately measuring inflation during Zimbabwe’s hyperinflation episode.
Just how was I able to do that? During episodes of hyperinflation, the only reliable and feasible way to measure inflation is via the application of Purchasing Power Parity (PPP). To do that, one needs data on the most important price in the economy: the exchange rate between the domestic and a stable international currency. This was not feasible in Zimbabwe. The Zimbabwe dollar was not traded on an organized exchange that reported exchange rates. Moreover, there were multiple black-market (read: free market) exchange rates for cash, as well as …read more