Hyperinflation
                     HYPERINFLATION
What Is 
Hyperinflation?
Hyperinflation refers to rapid and 
unrestrained price increases in an economy, 
typically at rates exceeding 50% each month 
over time.
Source: www.investopedia.com
Causes of 
Hyperinflation
• Hyperinflation commonly occurs when 
there is a significant rise in money supply 
that is not supported by economic growth. 
• The increase in money supply is often 
caused by a government printing and 
injecting more money into the domestic 
economy or to cover budget deficits. 
• When more money is put into circulation, 
the real value of the currency decreases 
and prices rise.
Source: www. corporatefinanceinstitute.com
EFFECTS OF HYPERINFLATION
Devalues the local 
currency
• Hyperinflation quickly devalues the local 
currency in foreign exchange markets as 
the relative value in comparison to other 
currencies drops. 
Source: www. corporatefinanceinstitute.com
Accumulate perishable 
goods
• In an attempt to avoid paying for higher 
prices tomorrow due to hyperinflation, 
individuals typically begin investing in 
durable goods such as equipment, 
machinery, jewelry, etc. In situations of 
prolonged hyperinflation, individuals will 
begin to accumulate perishable goods.
Source: www. corporatefinanceinstitute.com
Destroy the financial 
system
• Severe hyperinflation can cause the 
domestic economy to switch to a barter 
economy, with significant repercussions to 
business confidence. 
• It can also destroy the financial system as 
banks become unwilling to lend money.
Source: www. corporatefinanceinstitute.com
Germany
• The most well-known example of 
hyperinflation was during the Weimar 
Republic in Germany in the 1920s. 
• Through World War I, the amount of 
German paper marks increased by a factor 
of four.
Source: www. thebalance.com
Venezuela
• The most recent example of hyperinflation 
is in Venezuela. Prices rose 41% in 2013, 
and by 2018 inflation was at 65,000%.
Source: www. thebalance.com
Zimbabwe
• Zimbabwe had hyperinflation between 
2004 and 2009. The government printed 
money to pay for the war in the Congo. 
• Also, droughts and farm confiscation 
restricted the supply of food and other 
locally produced goods.
Source: www. thebalance.com
United States
• The only time the United States suffered 
hyperinflation was during the Civil War 
when the Confederate Government 
printed money to pay for the war.
• If hyperinflation were to reoccur in 
America, the Consumer Price Index would 
measure it. 
Source: www. thebalance.com