Cost Push Inflation

The diagram on the left shows cost push inflation.

But why have the cosst risen?

Why have the costs of materials risen? One answer is that there is a high demand for them. Thus the 'cost push inflation' has been caused by demand.

Which means that it's nOT cost-push inflation...doesn't it?

In which case does cost-push inflation exist?

1 comment:

  1. Cost push inflation occured only when there is a continous rise in the general price levels due to increasing output costs, which means that a high cost of inputs lead to a fall in aggregate supply where aggregate demand remain constant.