Kinda. Inflation is just buying the items to make the price go up. Selling them back will deflate them as you sell them, and thus isn't part of inflation.

In short:
The price of an item is 5g. You buy one (-5g). The price goes up to 10g. You buy one (-15g). The price goes up to 15g. You buy one (-30g).
You sell one for 15g (-15g). The price drops to 10g. You sell one for 10g (-5g). The price drops to 5g. You sell one for 5g (0).
You're back where you started. You just ended up getting your money back.

For math nerds, we wouldn't inflate the item after 15g, because the limit as x approaches 0 of Inflation(x) = New_Price(x) - Old_Price(x) = 0. The example inflations as an easy-to-read rate, whereas a marketplace item would increase at the rate of a fraction of 1g.

Hence inflation only works if the botter gets banned (and said items don't get released back into the marketplace).