Hyperinflation

Hyperinflation

Hyperinflation occurs when the prices of goods and services rise precipitously, at a rate of more than 50% per month. In a historical context, government money printing above an economy’s ability to absorb it has been a typical driver of hyperinflation. As has a dramatic surge in demand for goods with limited supply (often caused by stockpiling); these two drivers are often connected. Hyperinflation destroys the value of savings and the value of currencies in FX markets, rendering imports prohibitively expensive. If there is one benefit of hyperinflation, it is a boon to heavily indebted consumers and companies (because debt becomes worthless) and exporters (whose exports become cheap and they are able to earn heavily accreting foreign currencies).

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