Hyperinflation is the phenomenon of extremely high or fast rising inflation. The prices of all goods and services keep rising rapidly. This increase in the prices quickly lead to erosion of the real value of the local currency.
Because hyperinflation raises the prices of produce within a very short period of time, a farmer who has sold his produce in the morning, may get higher prices for the same level of produce in the evening, due to the rise in prices during that short period. So the farmer tends to hold back, or hoard his output so that he can reap maximum monetary benefit from his produce. As agricultural produce is a basic necessity and has no substitute, it has to be purchased regardless of the costs. This contributes to a great increase in the prices of the agricultural output. But as the produce is perishable, it cannot be stored indefinitely. This controls prices a little.
Since in an economy, all the products and services are somehow or the other interlinked, they determine each other’s prices to a certain extent. When the farmer stores his output in order to sell it at higher prices, he has directly increased the prices of agricultural produce. This results in a domino effect on the whole economy, essentially raising the prices of nearly all the goods and services.
The farmers store their output during hyperinflation. This increases the prices of the output and of nearly all the goods and services, and thus leads to greater hyperinflation. In order to reduce hyperinflation, these tendencies must be controlled. Otherwise, the local currency, and the whole surrounding economy, may collapse.
Reference List
Wikipedia Contributors (2019). Hyperinflation. [online] Wikipedia. Available at: https://en.wikipedia.org/wiki/Hyperinflation [Accessed 22 Oct. 2019].