Inflation refers to the amount of money in circulation exceeding the total amount needed in the circulation of goods, leading to the depreciation of money and the rise in prices, which is what we often say, ‘Money is becoming more and more worthless.’ For example, in the 1940s, China experienced a serious inflation, where the market price of a fried dough stick was over 100,000 yuan, and it took a pile of paper money to buy a vegetable. Hyperinflation usually occurs with the decline in production, the weakening of the market, the rise in unemployment, the decrease in income, the lack of economic growth, and is manifested as the downturn in price levels, the decline in prices of most products and services.

In essence, inflation is mainly due to the excess of social total demand over social total supply, and hyperinflation is mainly due to the deficiency of social total demand over social total supply.

Inflation and hyperinflation have their respective advantages and disadvantages – in the short term, appropriate inflation can stimulate consumption, boost domestic demand, and is beneficial to maintaining a certain rate of economic growth; but in the long term, inflation immediately leads to hyperinflation, which reduces the specific purchasing power of ordinary people, and in serious cases can lead to the disorder of social culture and living discipline. Hyperinflation causes the reduction of price levels, which is beneficial to the daily life of ordinary people to a certain extent, but it will have a serious impact on the confidence of investors and the consumption concept of households, causing a fierce price war, which is not good for social and economic development, and will eventually harm the rights and interests of ordinary people, such as a significant increase in the number of unemployed.

The National Bureau of Statistics of China has released the national consumer price index (CPI) and producer price index (PPI) for October. The data shows that the CPI has decreased by 0.1% on a monthly basis and increased by 2.1%; the PPI has increased by 0.7% year-on-year and by 1.2% on a monthly basis. It should be said that there is no significant inflationary pressure in our country at present, but some authoritative experts believe that the trend of rising prices will continue until before the Spring Festival. I think, in fact, this reflects the signs of stable and progressive economic development in our country. If there is a mild inflation, we do not need to be overly worried.