Cost-push inflation: Difference between revisions

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'''Cost-push inflation''' is a type of [[inflation]] caused by substantial increases in the cost of important [[good (economics)|goods]] or services where no suitable alternative is available. It stands in contrast to [[demand-pull inflation]]. Both accounts of inflation have at various times been put forward with oftentimes inconclusive evidence as to which explanation is superior.<ref>{{cite journal|last1=Samuelson|first1=Paul A.|last2=Solow|first2=Robert M.|title=Analytical Aspects of Anti-Inflation Policy|date=1960|volume=50|issue=2|pages=177–194}}</ref> A situation that has been often cited of this was the [[1973 oil crisis|oil crisis]] of the 1970s, which some economists see as a major cause of the inflation experienced in the [[Western world]] in that decade. It is argued that this inflation resulted from increases in the cost of [[petroleum]] imposed by the member states of [[OPEC]]. Since petroleum is so important to industrialized economies, a large increase in its price can lead to the increase in the price of most products, raising the [[price level]]. Some economists argue that such a change in the price level can raise the [[inflation rate]] over longer periods, due to [[adaptive expectations]] and the [[price/wage spiral]], so that a [[supply shock]] can have persistent effects.<ref>{{Cite web|url=https://www.investopedia.com/terms/c/costpushinflation.asp|title=Cost-Push Inflation|last=Kenton|first=Will|website=Investopedia|access-date=2019-02-25}}</ref>
 
== Causes ==
*Rising prices of raw materials.
*Rising Labour Costs.
*Higher indirect tax.
*Imported inflation.
*Profit-push: monopolies rising prices to reap more profit.
 
== See also ==