Cost-push inflation

Definition

Cost-push inflation occurs when the overall prices in an economy rise due to increases in the costs of production, such as raw materials and wages. This type of inflation results not from increasing demand, but from rising costs that suppliers pass on to consumers.

Related terms

Supply shock: A sudden increase or decrease in supply that can lead to cost-push inflation if it results in increased production costs.

Wage:

price spiral - A situation where rising wages increase production costs, leading to higher prices, which then lead to demands for even higher wages.

Stagflation: A condition of slow economic growth and relatively high unemployment accompanied by rising prices (inflation)