TOML

Types of Inflation - TOML

Inflation is an economic phenomenon where the general price level of goods and services rises continuously over time. It is primarily classified into two types: demand-pull inflation and cost-push inflation. Demand-pull inflation occurs when aggregate demand exceeds aggregate supply, while cost-push inflation arises when short-run aggregate supply decreases due to rising production costs. Understanding these types is crucial for policymakers to implement effective inflation control measures and maintain economic stability.

inflation demand-pull cost-push economics price increase supply and demand macroeconomics

[[items]]
code = "01"
slug = "demand-pull-inflation"
name = "Demand-Pull Inflation"
description = "Inflation that occurs when aggregate demand exceeds aggregate supply."
causes = "[\"Increased consumer spending\",\"Expansion of government spending\",\"Investment surge\",\"Export growth\",\"Monetary easing policy\"]"
characteristics = "[\"Demand-driven\",\"Accompanied by economic growth\",\"Tendency toward employment improvement\",\"Can worsen due to supply constraints\"]"

[[items]]
code = "02"
slug = "cost-push-inflation"
name = "Cost-Push Inflation"
description = "Inflation that occurs due to rising costs of production."
causes = "[\"Wage increases\",\"Surging oil and energy prices\",\"Rising raw material costs\",\"Exchange rate depreciation\",\"Cost increases from tighter regulations\"]"
characteristics = "[\"Supply-side factors\",\"Not accompanied by economic growth\",\"Decline in real wages\",\"Risk of stagflation\"]"

[[items]]
code = "03"
slug = "built-in-inflation"
name = "Built-In Inflation"
description = "Inflation where past inflation expectations are reflected in current wage and price setting."
causes = "[\"Entrenched inflation expectations\",\"Adaptive expectations\",\"Wage-price spiral\",\"Increasing index-linked contracts\"]"
characteristics = "[\"Self-reinforcing\",\"Expectations-driven\",\"Difficult to control\",\"Spiraling vicious cycle\"]"