Hyperinflation
IntermediateHyperinflation is extremely rapid and out-of-control inflation, in which prices rise so quickly that money loses its value very fast, often defined as prices rising by more than 50% in a single month.
At 50% a month, prices would rise by nearly 13,000% over a year. In the worst historical episodes, prices have doubled within days or even hours.
Hyperinflation usually occurs when a government finances large spending by creating money, often during war, political upheaval or economic collapse, when it cannot raise enough through taxes or borrowing. As more money chases the same or fewer goods, prices soar. People then try to spend money as quickly as possible before it loses value, which drives prices even higher.
Well-known examples include Germany in the early 1920s, Hungary after the Second World War, Zimbabwe in the late 2000s and Venezuela in the late 2010s.
The effects are devastating. Savings become worthless, fixed incomes and pensions collapse in value, businesses struggle to set prices and people may turn to foreign currencies or barter. Ending hyperinflation typically requires major reforms, such as a new currency, strict limits on money creation and restoring confidence in the government's finances.
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