Question

Cost-push inflation is caused by

Answer 1

Cost push inflation is inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods.

Answer 2

Cost inflation is caused by factors that increase production costs.

Explanation:

Inflation is unusual under terms of cost drive. It occurs only under five special conditions.

• Monopolize: Companies that accomplish an industry monopoly can create cost-effective inflation.

• Inflation of wages: Inflation in wages takes place if workers have sufficient leverage to force wage growth.

• Natural Calamities: Natural disasters lead to inflation through supply damage.

• Tax Policy: Cigarette and alcohol taxes were meant to cut down but relevantly, prices were higher and inflation generated.

• Councils of Trade: Any nation that reduces its currency will be subject to higher import prices.