Candy, Currency and Chaos: Understanding Hyperinflation

Growing up, one of my favourite things was buying sour candy after school. I’d ask my father to stop the car at the store every day, and I’d walk in with my pocket money, knowing exactly what I was going to get. One day, I went into the shop as usual, but when I walked up to the counter, I was shocked to see the price had increased exactly by 50%!  Little me was devastated, especially since just last week, I was able to get two candies for the same price. At the time, I had no idea what inflation or hyperinflation meant, but I definitely felt the sting of that price hike. Fast forward to today, and I now realise that what I experienced was just a small taste of hyperinflation!

So, what exactly is hyperinflation? Hyperinflation is an extremely high, out-of-control increase in prices, which causes the value of money to deteriorate rapidly. It’s typically defined as exceeding 50% price increases per month or 100% per year. When hyperinflation sets in, it disrupts an economy in various ways.

Rapid Price Increases

Prices rise uncontrollably, often changing daily. This makes basic goods unaffordable, creating a struggle for people to buy even necessities, just like that candy bar I couldn’t afford anymore!

Currency Devaluation

As inflation rises, the currency loses value, hence it takes more money to buy the same products. This erodes savings and makes long term planning difficult for citizens.

Moving on to it’s effects.

(Psst...need some help defining some of these words? Check our online financial dictionary in our "Resources" page! Now, back to hyperinflation!)

Reduced Purchasing Power 

When prices rise, money loses its purchasing power, so you can buy less for the same amount. That candy bar I loved is just one example of how your ability to buy basic things is destroyed!

Business Closures and Unemployment

Companies struggle to keep up with the rising costs of production. If they can’t afford raw materials or wages, they close down, leading to layoffs and ultimately unemployment.

Onto the main idea of this article, Why exactly is this the worst type?  That’s because it kills economic stability, hyperinflation undermines the entire economic system, leading to a lack of investor confidence and the eventual collapse of public services. Furthermore, with the value of currency falling, savings become worthless. People who have worked hard to gather wealth suddenly find it vanishing in the blink of an eye. Lastly, it causes Poverty: As businesses close and unemployment rises, poverty skyrockets!

Looking back on that day when I couldn’t afford my candy bar anymore, I realize it was just a small glimpse into what can happen during hyperinflation. While I was upset about losing out on a treat, the real impact of hyperinflation is far more devastating. It doesn’t just make candy bars unaffordable—it can destroy entire economies, destroy savings, and leave people struggling to survive. Just as I learned the harsh reality of price hikes as a kid, countries experiencing hyperinflation face the even harsher reality of their money losing value, and with it, their sense of security and stability. 

Written by Tehreem Ali

Edited by Riya Kalapurakkal