Educational Post
What does hyperinflation mean?
Hyperinflation refers to a sharp increase in a country’s money supply, which leads to order of magnitude increases in average prices for goods and services. The more currency enters a country’s economy, the less valuable each unit becomes. This devaluation of fiat currency forces manufacturers and businesses to raise prices, often leading to a vicious hyperinflationary spiral.
While hyperinflation and inflation involve the same currency devaluation process, the former has more catastrophic economic effects. Most economists define hyperinflation as a monthly inflation rate of more than 50%. Contextually, many central banks in industrialized nations strive to maintain a “healthy” inflation rate of 2% per month.
Some financial analysts even use the terms “hyperinflation” and “superinflation” interchangeably.