# Hyperinflationary economy

> An economy where cumulative inflation over three years is approaching or exceeds 100 percent, among other signs. A subsidiary whose functional currency is that of such an economy restates its figures under IAS 29 before translation.

Source: https://finconsol.com/blog/glossary/hyperinflationary-economy/ (updated 28 October 2026)

## Why does it matter in a group?

IAS 29 lists signs of hyperinflation. One is cumulative inflation over three years approaching or exceeding 100 percent, which is about 26 percent a year.[1](#src-1) A subsidiary whose functional currency belongs to such an economy first restates its [non-monetary items](/blog/glossary/monetary-item/) for inflation. It then translates all its amounts at the [closing rate](/blog/glossary/closing-rate/), where the group's own currency is not hyperinflationary.[2](#src-2) Ask local advisers early: the restatement is a separate piece of work.

## A small example

A building was bought for 100,000 local units when the price index stood at 100. When the index reaches 210, the restated cost is 210,000 local units, and that figure is translated at the closing rate.

## Sources

## Sources

1. IAS 29 [Financial Reporting in Hyperinflationary Economies](https://www.ifrs.org/issued-standards/list-of-standards/ias-29-financial-reporting-in-hyperinflationary-economies/), paragraph 3.
2. IAS 21 [The Effects of Changes in Foreign Exchange Rates](https://www.ifrs.org/issued-standards/list-of-standards/ias-21-the-effects-of-changes-in-foreign-exchange-rates/), paragraph 42.