Legal Definitions - cost-push inflation

Cost-push inflation is a type of inflation that occurs when the cost of producing goods and services increases, leading to a rise in prices. This is different from demand-pull inflation, which occurs when there is too much demand for goods and services, leading to a rise in prices.

One example of cost-push inflation is when the cost of raw materials, such as oil or steel, increases. This can cause the cost of producing goods that use these materials, such as cars or buildings, to increase. As a result, the prices of these goods may also increase.

Another example is when there is a shortage of skilled workers, causing wages to increase. This can lead to higher production costs for businesses, which may then pass on these costs to consumers in the form of higher prices.

These examples illustrate how cost-push inflation can occur when there are increases in production costs, such as raw materials or labor, which then lead to higher prices for goods and services.