what is hyperinflation 
hyperinflation is a term to describe rapid excessive and out of control general price increases in an economy while inflation measures the pace of rising prices for goods and services hyperinflation is rapidly rising inflation typically measuring more than 50 per month although hyperinflation is a rare event for developed economies it has occurred many times throughout history in countries such as china germany russia hungary and georgia investopedia matthew collinsunderstanding hyperinflationinflation is measured by the bureau of labor statistics using the consumer price index cpi to measure the dollar s purchasing power the cpi is an index of the prices for about 94 000 commodities and services around 8 000 rental housing unit quotes and prices for airline fares apparel household goods prescription drugs used automobiles and postage generally speaking the federal reserve strives to maintain what it calls a healthy inflation rate of around 2 over the long term hyperinflation is an extreme case of inflation not just a high case inflation higher than 5 is considered high inflation inflation of 50 or more per month is considered hyperinflation for comparative purposes the u s inflation rate measured by the cpi averaged about 2 5 per year from 2013 through 2022 the average for june through april of 2023 was 5 55 in an environment of hyperinflation prices may increase daily or weekly which can have a dramatic impact on what consumers pay for basic necessities for instance imagine you always buy the same items at the grocery store if the economy were experiencing a rising inflation rate of 5 per day your grocery bill might rise from 500 one week to 675 the next week then as high 911 the week after that causes of hyperinflationalthough several circumstances can trigger hyperinflation here are the most common causes of hyperinflation central banks generally control the circulating supply of money in circumstances that historically warrant an increase in the money supply like a recession or depression central banks can increase the amount of money circulating the intent behind this action is to encourage banks to lend and consumers and businesses to borrow and spend however if the increase in money supply is not supported by economic growth as measured by gross domestic product gdp hyperinflation can result if gdp the measure of an economy s production isn t growing businesses raise prices to boost profits and stay afloat because consumers have more money they pay higher prices and feed inflation if economic output continues to stagnate or shrink and inflation keeps rising companies charge more consumers pay more and the central bank prints more money a cycle of increasing inflation rates occurs leading to hyperinflation demand pull inflation is a scenario in which aggregate demand becomes too high for aggregate supply this increases prices rapidly because there are not enough goods and services available to meet the increase in overall demand from consumers and businesses hyperinflation is the product of many circumstances and poor monetary decision making coming together effects of hyperinflationhyperinflation can cause several adverse consequences people may begin hoarding goods such as food in turn there can be food supply shortages 