You can instead opt to prevent the negative influences of inflation, while otherwise taking advantage of it. To do this you must make the market very accessible. Rather than relying on item clutter as a sink, drop only useful items that will be great hand-me-downs, upgrades or crafting components.
Where pragmatic, make drops slightly rare and prefer gold. Track inflation for equipment and items of all level/skill tiers, defining a ratio to the game's original value-balance.
Use this multiplier from the active market against gold drop rates. By doing this and restricting price changes to within + or - 40% within a given time, and increasingly discounted under market value for greater quantities of an item. Only allow price increases for small stacks (the size of an hour of drops/crafting) or HQ items. This way you provide players with a consistent financial-progress experience.
So, now that you've ensured a player can go grind and get obtain nice gear with a fair but not insane amount of effort, you can refine more market activity from there.
Detect trends within the market data gathered to track inflation. Give NPC guilds the ability to create items, given a combination of drops or money, as player crafters would. Then let them buy up underpriced items relative to how much cheap surplus is flooding an item's market. NPC activity can and should work at similar multiplier to player economy, making slightly less profit at a worse overhead than players (about 20-40% less efficient at profiteering is good). "Use" that profit to actually fund NPC salaries and activity. If NPC teams/armies can only move when they have enough gear, food, salary and recruits, the game can be quite dynamic from some simple self-balancing mechanics.
With a rough equilibrium formed, and as the game admin, you can play around with both inflation and deflation with temporary, gradient shifts in various ratios.
Another way to let both players and NPCs take advantage and self-adjust to inflation is through loans. Imagine a cursed ring of lending. Monetary activity is taxed until repayment, plus interest of course. If players can take out a substantial mortgage based on their average rate of earnings, and drops scale up with inflation as above, players can suddenly pay off their debts.
Ah, but you can measure the total inflation volatility, and pack that into the interest rates and transaction fees in various ways. Even go so far as to have various levels of tribes to governments take on massive debt and properly collapse, to suck tremendous amounts of gold out of the economy as needed.
Options are endless, but I'll provide one more. The most direct method of straight up deflating the economy is to really push the NPC involvement in player markets. Specifically, if:
- An item's cost inflates over x% of the original value
- The rate at which said item is bought is y pieces-per-(time unit of choice)
- Then, NPC group A undercuts the market; continuously lowering prices and posting more than y pieces-per-time until cost is z% below original value
- NPC group B-Z buys up all NPC group A's surplus once low enough in price
- The item's market value is now effectively reset and cannot inflate beyond x%
- If particular items continuously reset, trace its supply chain
- If taking this hardline approach by making the supply of goods higher than demand, directly deflating the market, you must be watchful to have mechanism that allow players to offload stagnant inventory that stopped selling after a market bust without going entirely broke