Definition
Hyperinflation is an episode of extraordinarily rapid and accelerating price increases. A common rule of thumb defines it as inflation above 50 percent per month, at which point prices can double in a matter of weeks or even days. At that pace, money loses its core functions as a store of value and a unit of account.
Unlike moderate inflation, hyperinflation is not a slow erosion but a collapse. It is almost always the result of a government financing large deficits by printing money, often during war, political breakdown, or fiscal crisis.
Why it matters
How it works
Hyperinflation typically begins when a government cannot raise enough through taxes or borrowing and turns to creating money to cover spending. As the money supply balloons, prices rise; people, expecting further rises, spend cash faster, which raises prices again. This feedback loop between rising prices and self-fulfilling expectations is what makes hyperinflation explosive. Stopping it requires breaking the loop — closing the fiscal gap so money creation stops — and often a new currency or a credible commitment that convinces the public the spiral is genuinely over.