Cost-push inflation

Inflation driven by a rise in the cost of goods and services

Cost-push inflation is a purported type of inflation caused by increases in the cost of important goods or services where no suitable alternative is available. As businesses face higher prices for underlying inputs, they are forced to increase prices of their outputs. It is contrasted with the theory of demand-pull inflation. Both accounts of inflation have at various times been put forward, with inconclusive evidence as to which explanation is superior. Cost-push inflation can also result from a rise in expected inflation, which in turn the workers will demand higher wages, thus causing inflation.

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