Silent killer

It is one of the most famous photographs of the 20th Century - a group of children in 1920s Germany playing with stacks of money like building blocks. The currency was the German Mark which, in the post-war Weimar RepublicThe government of Germany from 1918 to 1933. , became so useless due to hyperinflationInflation that reaches more than 50% per month. In such conditions, money quickly becomes worthless, and people simply stop using it. that workers were paid three times per day and transported their wages home in wheelbarrows.¹

This might provide some relief to those concerned about the UK's latest inflationAn increase in the price of goods in an economy.  statistics: it is not all that bad for Britain yet. The latest figures show that inflation in the country has risen by 10.1% in the 12 months to September, the fastest rate of inflation in 40 years.

In the midst of news about war, turbulent global protests and raging climate change, many might be tempted to disregard a little bit of inflation. They should not, experts warn. The cost of livingThe money that someone needs to afford basic food, housing and clothes. crisis might be a quiet killer, given 90,000 people die in poverty in the UK every year. This sum is greater than even the highest estimates of fatalities from the war in Ukraine.

Inflation has killed and sown discontent in societies for as long as economies have existed. So how does it keep happening, and what can three examples from history teach us?

The Hungarian pengo, 1946.

What was it? Hungary takes the dubious crown for the worst ever recorded case of hyperinflation in history. In the first half of 1946, hyperinflation was so advanced that prices doubled every 15.6 hours, and rose at a rate of 150,000% per day.²

What caused it? Hungary's government had complete control over the country's central bank at this time, and responded to its weak economy during World War Two by rapidly printing money, which pushed up prices. The pengoThe currency of Hungary between 1927 and 1946. became worthless.

How fatal was it? There are no statistics for how many people died as a result of this case of hyperinflation, but workers' real wagesWages adjusted for inflation - a guide to how standards of living have changed. fell by 80%, plunging millions into potentially fatal poverty.

The Great Babylon Inflation, circa 323BC.

What was it? The first ever recorded inflation occurred after the death of Alexander the GreatA king of ancient Macedon who is renowned as one of the greatest military leaders in history. He conquered a vast empire stretching from Greece to modern-day Pakistan., and halved the value of the shekel, the currency of ancient Babylon.

What caused it? Historians think that the treasures brought back by Alexander from his conquests constituted huge injections of currency into the economy. Food traders pushed prices up to share in the goods.

How fatal was it? Inflation doubled the price of basic foodstuffs such as grain, rendering hundreds or possibly even thousands unable to afford the cheapest available food in a city of around 25,000 people.

The Great Inflation, 1965 - 1982.

What was it? An extended period of high inflation in the United States due to poor economic planning, which was followed by a recessionA period of economic decline. A recession occurs when a country's Gross Domestic Product falls for six months in a row. . The inflation rate rose as high as 14%.

What caused it? The price rises were caused by skyrocketing oil prices, currency speculation, and huge budget deficits.

How fatal was it? Standards of living dropped to record lows, unemployment hit double digits, and savings were depleted dramatically. Across the entire period, millions died whilst enduring poverty.

Yes: Statistics show that as many people can die as a result of poverty caused by inflation as in a major global conflict. The number of people who could suffer and die because of the current economic crisis should terrify us.

No: The statistics are not absolute. They only tell us how many people died in poverty, not as a result of poverty. The factors could be unrelated. We cannot be 100% certain inflation causes individual deaths.

Or... The statistics are worrying, but we cannot look at inflation as universally bad. Inflation can discourage saving and boost spending, and benefits those with debts. Small rates of inflation of around 2% to 3% are even encouraged by economists.