Demand-pull inflation

Definition

Demand-pull inflation occurs when the demand for goods and services exceeds the available supply, leading to an increase in prices. It reflects a situation where the buying power and desire of consumers outstrip production capacities.

Related terms

Aggregate demand: The total demand for all goods and services in an economy at a given overall price level and in a given time period.

Inflation:

A general increase in prices and fall in the purchasing value of money.

Supply and demand: An economic model that determines the price of a good or service based on the market's supply and demand for it