Hyperinflation

The dictionary meaning of ‘hyper’ is ‘excessive’. Strictly, therefore, ‘hyperinflation’ means ‘excessive inflation’ or ‘abnormally rapid inflation’. To the economist, however, the term ‘hyperinflation’ means much more than this. Throughout the 1950s and the 1960s the average inflation rate in the advanced industrial countries was, in general, well below 10 per cent per annum. Judged by this standard the inflation rates of around 20 per cent per annum which have begun to appear in these countries since 1970 are certainly ‘excessive’; the average inflation rates of around 40–50 per cent per annum, which several of the Latin American countries suffered in the 1950s and 1960s, are ‘wildly excessive’. It is not, however, inflation rates of 20 per cent per annum or even 50 per cent per annum that the economist has in mind when he uses the term ‘hyperinflation’. What he is thinking of is a situation in which the annual inflation rate runs into hundreds, even thousands, of per cents, a situation in which money loses value so rapidly that spending money as soon as possible after receiving it becomes a major preoccupation of the populace at large. The term ‘galloping inflation’, which is sometimes used instead of ‘hyperinflation’, perhaps gives a clearer picture of the situation being described.