Cost-push inflation

Cost-push inflation occurs when the overall price levels in an economy rise due to increased costs of production and raw materials. This type of inflation is driven by factors such as rising labor costs, higher prices for raw materials, or increased costs of production inputs. When these costs increase, producers may pass on the higher expenses to consumers in the form of higher prices for finished goods and services. This leads to a general rise in prices, reducing the purchasing power of money. Cost-push inflation is different from demand-pull inflation, which is caused by increased demand for goods and services.