The worst inflation situations of all time

Germany Post WWI – 1923

The hyperinflation suffered by Germany's Weimar Republic is arguably one of the most famous examples. Germany had entered WWI expecting an easy victory and began to finance their military by essentially abandoning the gold standard and printing money without backing their issued currency note with their gold reserves.

What that eventually led to was a volatile hyperinflation situation in 1923. The Treaty of Versailles imposed heavy reparations on Germany, which had to be paid in gold or foreign currency equivalent, instead of German Papiermark. The government began to use debt-backed papeirmarks to purchase the foreign currency, this led to an acceleration of the devaluation of their currency. France and Belgium invaded the industrialised Ruhr Valley in January 1923 to demand reparation payments in hard assets.

The German economy quickly imploded, by November 1923, the exchange rate had skyrocketed to about 238 million Papiermark to 1 US dollar with a monthly inflation rate of 29,500%.

Meanwhile, Germans struggled for survival amidst this economic panic. In January 1923, bread cost 250 marks—by the end of that year, it reached 200 million marks. Piles of money were used as kindling (it was cheaper than firewood), making arts and crafts, etc. Some avoided using currency and used their tangible assets to barter goods.

The hyperinflation finally ended in late 1923 when the government issued a new currency, the rentenmark, which was backed by mortgages on land. The turmoil left its stain on the German people however and played a massive role in the rise of fascism.

United States – 1970

The US experienced a period of stagflation in the 1970s. Most of the blame fell on the US Federal Reserve's unsustainable economic policies during the 1950s and 1960s. The OPEC oil embargo in 1973 also played a role as the country suffered from high oil prices and shortages. Industrial output fell as a result of their lowering demand.

In November 1979, oil prices were soaring high, surpassing $100 per barrel. In 1980, annual inflation peaked at 13.5%. Unemployment was also high and economic growth was affected. The US economy was in recession from December 1969 to November 1970, and again from November 1973 to March 1975.

Zimbabwe – 2008

Zimbabwe's path to hyperinflation began in the 1990s when the government redistributed land from European farmers to Zimbabweans. The new farmers were not experienced and this led to a loss in the country's food production capacity. Supply dropped below demand and prices shot up. As white businessmen and farmers fled, the banking sector also experienced a severe shock.

Things came to a head by the 2000s, the government printed money excessively (21 trillion ZWD by 2006) to pay loans and other costs. This led to a de-valuement of ZMD. In 2007, there was an extreme shortage of basic food, fuel and medicine. Monthly inflation increased by 1,15,000% by the end of 2007. 

Workers went without pay and infrastructure began to crumble. At the peak in November 2008, prices were doubling every 24 hours. The monthly inflation rate reached an estimated 79 billion % according to the Cato Institute.
At one stage the price of bread rose from $2 million to $35 million overnight. Prices in shops and restaurants were adjusted several times over the course of one day. The situation was so dire that the government issued one hundred trillion dollar notes in 2009. 

The situation finally came under control when the Reserve Bank of Zimbabwe re-priced the currency, pegging it to the US dollar. Though Zimbabwe still suffers from inflation to this day, it has not reached the extremes of 2008.

Venezuela – 2013

Venezuela's hyperinflation began in 2013 as a result of new President Nicolas Maduro and his government's overspending and overprinting bank notes. Though they are still undergoing inflation, the situation has remarkably improved. For the month of April 2022, Venezuela's Central Bank (BCV) reported April's inflation had reached 4.4%, the lowest of any month of April since 2014. In comparison, the BCV estimates that the inflation rate increased to 53,798,500% between 2016 and April 2019.

Once the envy of South America, Venezuela enjoyed prosperous growth in the 20th century, owing to its oil reserves. 92% of the country's export earnings were from oil. When the global oil price dropped so did the foreign demand for the bolívar to buy Venezuelan oil. The currency value fell and costs began to rise, in turn the economy went into a crisis. The government's decision to print more money to solve this instead declined the value further. 

By 2018, it became cheaper to use the bolívar as toilet paper instead of buying actual toilet paper. Money was simply being thrown away, burnt or repurposed to make other goods such as handbags. Enraged citizens were forced to engage with the unofficial currency market such as the black market or by selling subsidised Venezuelan goods across the border.

Maduro's decision to reduce money printing and lift economic sanctions alleviated the strain and helped break out of one of the world's longest bouts of hyperinflation. 

Sri Lanka – 2022

Years of mismanagement by Sri Lanka's government led by Mahinda Rajapaksa, a ban on chemical fertilisers and pesticides and massive loans from foreign lenders were largely to blame for the Sri Lankan economy's complete collapse. Sri Lanka is currently facing hyperinflation, budget and current account deficits, a devalued currency and a huge sovereign debt that it is unable to pay.

The nation has been rocked by protests and though Rajapaksa have recently been forced to resign, the island's inflationary troubles are far from over. Sri Lankans are facing a severe foreign exchange shortage of essentials such as fuel, fertilisers, food and medicine as it does not have the foreign currency to import.

As of 30 June, Sri Lanka has reached hyperinflation levels at a staggering 54.6%, according to Prime Minister Wickremesinghe, it is expected to reach 60% in the coming months. Food inflation reached 80.1%.  

The country owes more than $51bn (£39bn) to foreign lenders, including $6.5bn to China, which has begun discussions about restructuring its loans. While the World Bank has agreed to lend Sri Lanka $600m and India has offered at least $1.9bn. They have been in talks with the International Monetary Fund (IMF) about a possible loan of $3bn.