People are familiar with the word inflation but we rarely hear the term hyperinflation. This is defined as an inflation gone wild. This can happen when a country prints a lot of money because they don’t have other way of getting revenue. It is defined also when the countries’ inflation rate exceeds 50% per month. Hyperinflation usually occurs when the economy is weak and there is a shock caused by war, international isolation or natural disasters.
Effects of hyperinflation:
- Prices go up exponentially. A piece of bread can cause thousand of dollars.
- Hoarding of goods thus making prices higher. It affects the supply and demand of basic goods, commodities and services.
- Too much printed money will end up with a limited number of goods and confidence among people can disappear.