hyperinflation

noun hy·per·in·fla·tion \ ˌhī-pər-in-ˈflā-shən \

Updated on: 11 Apr 2018

Definition of hyperinflation

: extreme or excessive inflation: such as

a : excessive distension with air or gas

hyperinflation of the lungs

b : extreme economic inflation with prices rising at a very high rate in a very short time

But the policy also fueled hyperinflation that experts say left Iran's economy weaker in the long run.
—Ramin Mostaghim

also : a period of such inflation

While every company may employ any of a variety of cash investment options during hyperinflation, every successful company has one policy in common …
—Gerald Swanson

—

hyperinflationary

play \ˌhī-pər-in-ˈflā-shə-ˌnər-ē\ adjective

See hyperinflation defined for English-language learners

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Recent Examples of hyperinflation from the Web

Because Zimbabwe discontinued its currency in 2009, following a disastrous cycle of hyperinflation, Zimbabweans can’t use credit cards to make purchases abroad.

— karan mahajan, The New Republic, "After the Strongman," 26 Mar. 2018
The once wealthy nation — which used to provide billions of dollars in aid to its allies — is caught in a hyperinflation spiral.

— antonio maria delgado and mario j. pentón, miamiherald, "Once-rich Venezuelans live as beggars in Colombia, but they don’t want to go back," 6 Feb. 2018
But their slow and uneven adjustment means the pain of hyperinflation is shared haphazardly.

— The Economist, "Venezuela’s currency plumbs unknown depths," 25 Jan. 2018
The country is suffering from hyperinflation, with prices doubling every month.

— The Economist, "Venezuela's crypto-currency: salvation or scam?," 17 Mar. 2018
Previous attempts at dialogue have yet to yield any concrete results even as hyperinflation and barren store shelves leave thousands of Venezuelans going hungry.

— Bloomberg.com, "Venezuelan Opposition Eyes Presidential Vote in First Half of 2018," 10 Jan. 2018
For 14 years, the Weimar Republic ruled Germany amid hyperinflation, political extremism and contentious relationships with the victorious Allies.

— ashley halsey iii, Washington Post, "A killer flu was raging. But in 1918, U.S. officials ignored the crisis to fight a war.," 3 Feb. 2018
Wages made meaningless by hyperinflation force workers who remain to rely on the facilities for food.

— bloomberg, Houston Chronicle, "Too hungry to pump oil, PDVSA crews skip work to hunt for food," 22 Feb. 2018
Buckling under hyperinflation, economic sanctions and an anemic and scarce currency, Venezuela has gotten inventive.

— jim wyss, miamiherald, "Venezuela scrambles amid economic collapse - and comes up with a crypto coin | Miami Herald," 21 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'hyperinflation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of hyperinflation

1880

Financial Definition of HYPERINFLATION

hyperinflation

noun

What It Is

Hyperinflation is a period of extremely high inflation.

How It Works

Imagine if $30,000 -- money that could buy you a car today -- was only enough to buy you dinner tomorrow. You're imagining hyperinflation -- a period of time that the International Monetary Fund defines as "beginning in the month that the rise in prices exceeds 50 percent and as ending the month before the monthly rise in prices drops below that rate and stays far below it for at least a year."

Hyperinflation happens when a country's money supply increases rapidly but its supply of goods and services don't. As you know, increases in demand without corresponding increases in supply creates increased prices for those goods and services. When this happens quickly, hyperinflation occurs.

Armed conflicts that require extraordinary defense spending, general fiscal imbalances or printing currency in order to pay off government debt are all common generators of hyperinflation because they increase money supply without a corresponding increase in goods and services. And the problem can quickly spiral because when sellers begin to believe that prices will keep going up, they keep raising prices. This usually creates crises in the banking industry because deposits dwindle and withdrawals soar. And all of these factors in turn discourage foreign investment in the currency and businesses using that currency.

Recovering from hyperinflation can take years, if not decades, and requires government adjustments to its fiscal policy.

Why It Matters

Hyperinflation reduces the efficiency of the price system and the usefulness of a country's currency as a store of value -- that is, it often leaves a country's currency worthless. The problem is typically confined to developing economies, however, so investors in these economies should consider this additional risk when investing.

Source: Investing Answers