hyperinflation

noun

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

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

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His desire for some sort of reconciliation with the U.S. has increased as international pressure has been building on his socialist government at a time of hyperinflation and widespread food and medicine shortages. — Fox News, "Venezuela's Maduro says he is 'ready' to meet Trump in surprise UN speech," 27 Sep. 2018 Peru at that time was racked by hyperinflation and terrorism. — The Economist, "Latin America searches for redemption on the football pitch," 21 June 2018 Such devices are used by security forces to break up protests that regularly fill the streets of Venezuela, which has been rocked by hyperinflation and shortages of even the most basic of goods. — Rachelle Krygier, Washington Post, "World Digest: June 16, 2018," 16 June 2018 Venezuela's hyperinflation is so bad that food prices can double every week. — Jenni Marsh, CNN, "Our children's plastic lives seen through lunches," 7 June 2018 That led to massive hyperinflation and food shortages that effectively collapsed the country’s economy: Experts put the cost to Zimbabwe’s economy at around $20 billion. — Jennifer Williams, Vox, "Trump’s tweet echoing white nationalist propaganda about South African farmers, explained," 23 Aug. 2018 Mr Maduro’s proposal for dealing with hyperinflation is simpler: just knock three zeros off the bolívar. — The Economist, "As Venezuelans go hungry, their government holds a farcical election," 17 May 2018 Venezuelans will head to the polls Sunday to elect a new president as the country is roiled by an economic and social crisis, with millions suffering food and medicine shortages, hyperinflation and growing insecurity. — CNN, "Venezuela inmates seize control of prison ahead of presidential election," 17 May 2018 The subsidy would have been worth $17 as recently as last November; hyperinflation amid a collapsing economy is likely to make the subsidy worth even less in the weeks to come. — Laignee Barron, Fortune, "Venezuela Promises Pregnant Women a Handout That's Worth Almost Nothing," 16 Jan. 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.

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4 Dec 2018

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The first known use of hyperinflation was in 1880

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More Definitions for hyperinflation

hyperinflation

noun

Financial Definition of hyperinflation

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

hyperinflation

noun