UK Accounting Glossary
In economics, ”’hyperinflation”’ is very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as they usually switch to more stable foreign currencies, often the US Dollar. Prices typically remain stable in terms of other relatively stable currencies.
Monetary inflation occurring at a very high rate.
economics A very high rate of Inflation.
Hyperinflation is the extremely rapid escalation of prices (typically more than 50% per month) for goods and services. The most famous hyperinflation of the modern era occurred in Germany in 1920-1923 when the government began printing money to make up for revenue lost to a general strike. The German hyperinflation resulted in a percentage increase in prices in the millions per month. Other cases of hyperinflation (Greece, Hungary) following World War II were even more extreme. The root cause of hyperinflation tends to be the excessive printing of currency by the monetary authority. Hyperinflation is extremely disruptive by making savings worthless very quickly, thus encouraging workers to spend money as fast as it is earned. Even moderate inflation is feared because of its potential to lead to hyperinflation, but many countries have experienced moderate inflation without hyperinflation resulting.
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This glossary post was last updated: 9th February 2020.