What is hyperinflation?

Hyperinflation is characterized by an extremely high and accelerating inflation rate, which significantly erodes the purchasing power of currency. This phenomenon often results in rapid price increases across the economy, leading to a loss of confidence in the currency as a medium of exchange. In cases of hyperinflation, inflation rates can rise drastically, often exceeding 50% per month, causing economic instability and prompting individuals and businesses to seek alternative forms of currency or barter systems.

This definition reflects the distinctiveness of hyperinflation compared to more moderate or stable inflation scenarios. Moderately high inflation would not reach the severity or rapid pace seen in hyperinflation, while an inflation rate of 2% per year would be considered low and stable, not indicative of hyperinflation at all. Furthermore, stable inflation under 3% annually also contrasts sharply with hyperinflation, highlighting the considerable differences in economic conditions associated with varying rates of inflation.