We utilize a unique data set comprising high-frequency (weekly or higher) grain prices at the city level in 1940s China to investigate the impact of inflation on price dispersion during periods of very high inflation. Our findings demonstrate that, as inflation rates increase, city-level grain prices converge more rapidly to the national average, leading to a reduction in price dispersion. We support this novel observation by developing a pricing model that incorporates state-dependent "attention to inflation", whereby individuals pay greater attention to overall prices as inflation rates rise, thus modifying the relationship between inflation and price dispersion. Our attention theory is also bolstered by the presence of a strong empirical correlation between newspaper coverage of "prices" and inflation rates. Overall, our study offers valuable insights into price setting as inflation and attention change.