What does hyperinflation mean?

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What does hyperinflation mean?

Hyperinflation occurs when a country experiences a drastic surge in its money supply, resulting in substantial increases in average prices for goods and services. As more currency enters the economy, the value of each unit diminishes, leading to the devaluation of fiat currency. This devaluation forces manufacturers and businesses to raise prices, often triggering a destructive spiral of hyperinflation.

While both hyperinflation and inflation involve currency devaluation, hyperinflation has more severe economic consequences. Economists typically define hyperinflation as a monthly inflation rate exceeding 50%, whereas central banks in developed nations aim to maintain a “healthy” inflation rate of around 2% per month.

In some cases, the terms “hyperinflation” and “superinflation” are used interchangeably by financial analysts.

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