Hyperinflation

Hyperinflation is used to describe the rapid, excessive, and out-of-control price increases in the economy over a defined period of time. Also known as extremely rapid inflation, hyperinflation has two main causes: an increase in the money supply and demand-pull inflation. With the money supply dramatically increasing without economic growth’s support, and the demand-pull inflation surging in demand thay outstrips supply, the rate of inflation grows at more than 50% a month. As there is more money in circulation, prices rise. Hyperinflation quickly devalues the local currency in foreign exchange markets as the prices of goods and services rise in conjunction with an increase in the money supply. While hyperinflations are typically rare, once they begin they can spiral out of control.