Inflation can be very unpleasant, especially when it reaches a high level. But what does galloping inflation actually mean?
First of all, inflation is an increase in the general price level of goods and services. This usually happens when there is more money in circulation than there are goods and services. However, when inflation increases very rapidly and dramatically, it is called galloping inflation.
Galloping inflation occurs when prices rise very rapidly, usually more than 50 percent per month. This can lead to a downward spiral in which people try to sell their goods and services as quickly as possible before prices rise even further. At the same time, it is harder to raise prices to keep up with rising costs.
Galloping inflation can have many causes. Some of the most common causes are wars or political instability, where the government prints too much money to fund its wars or other actions. Another cause can be overvaluation of the currency, where confidence in the currency decreases and people exchange their money for other currencies.
The effects of runaway inflation can be devastating. People lose confidence in the currency and look for alternative means of payment, such as buying goods, precious metals or other currencies.