What is hyperinflation? When prices spiral out of control
By SendPay Business · · 2 min read
Hyperinflation is extremely fast inflation, where prices rise so quickly that money loses most of its value within months or even days. A common definition, from the economist Phillip Cagan, is prices rising by more than 50% in a single month.
What causes it
Hyperinflation usually starts when a government prints large amounts of money to pay its bills, often after a war, a collapse in output or a loss of access to borrowing. As people lose trust in the currency, they spend it as fast as they can, which pushes prices up even faster.
Famous examples
- Germany, 1923: prices doubled every few days at the peak, and people carried cash in wheelbarrows.
- Zimbabwe, 2007 to 2009: the central bank issued a 100 trillion dollar note before the currency was abandoned.
- Venezuela, late 2010s: years of very high inflation led many people to use US dollars instead.
How people cope
In hyperinflation, people swap local cash for goods, foreign currencies such as US dollars, or other stores of value as quickly as possible. Businesses reprice constantly, and many start quoting prices in a foreign currency.
Where SendPay fits
SendPay platforms include GBP, EUR and USD accounts, transfers and currency exchange, powered by licensed partners. Where you can offer them depends on local rules in each country.
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How fast do prices double in hyperinflation?
Our free hyperinflation calculator turns a monthly rate into a yearly one and shows the doubling time.
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.