hyperinflation

play

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

Updated on: 26 Jul 2017

Definition of hyperinflation

:inflation growing at a very high rate in a very short time; also :a period of hyperinflation

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hyperinflationary

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

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Recent Examples of hyperinflation from the Web

Despite sitting on the largest oil reserves on the planet, Maduro has steered the economy into hyperinflation that has left millions hungry and poor.

— ioan grillo, TIME.com, "Scenes From a Last Gasp of Democracy," 12 Aug. 2017
The decision to hold the vote appeared set to prolong and deepen the suffering of the people of Venezuela, where hyperinflation and scarcities have sent poverty soaring, crippled medical care and increased hunger.

— anthony faiola, chicagotribune.com, "Defying international calls, Venezuela holds contentious election; 14 reported dead," 30 July 2017
The country is in political crisis, but also economic crisis, with food and medicine shortages and dangerous hyperinflation.

— jen kirby, Daily Intelligencer, "What the Hell Is Happening in Venezuela?," 29 July 2017
Families risk being scratched off government food distribution rosters for not showing up — a dire outcome in a country where a socialist experiment and economic mismanaged have sparked hyperinflation and food shortages.

— anthony faiola, Washington Post, "Venezuela’s vote for a constitutional assembly could destroy democracy, critics warn," 27 July 2017
The president who pays cash in advance Eight years after the Zimbabwe stopped using its own currency in to end a period of hyperinflation, government policies have caused an acute cash crisis.

— matt peterson, The Atlantic, "Four Global Scandals Fueled by Cold, Hard Cash," 7 June 2017
The president who pays cash in advance Eight years after the Zimbabwe stopped using its own currency in to end a period of hyperinflation, government policies have caused an acute cash crisis.

— matt peterson, The Atlantic, "Four Global Scandals Fueled by Cold, Hard Cash," 7 June 2017
Zimbabwe, which abandoned its own currency eight years ago and adopted mainly the dollar in a bid to halt hyperinflation, is contending with a shortage of cash, with banks limiting customer withdrawals.

— michael cohen, Bloomberg.com, "Ailing African Presidents Leave Nations in Leadership Limbo," 30 May 2017
Salaries have been wiped out with hyperinflation and millions have been left hungry, malnourished and scouring through the garbage for food.

— carmen sesin, NBC News, "Venezuela’s Violence Seen in Killing of Carolina Herrera’s Nephew," 18 May 2017

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

1930

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