What are the types of inflation?

What are the different types of inflation?

There are several types of inflation, including demand-pull inflation, cost-push inflation, and built-in inflation. Would you like to know more about each type?

Yes, please explain demand-pull inflation.

Demand-pull inflation occurs when the demand for goods and services exceeds their supply, leading to higher prices. This often happens in a growing economy.

What about cost-push inflation?

Cost-push inflation happens when the costs of production increase, causing producers to raise prices to maintain profit margins. This can be due to rising wages or increased prices for raw materials.

And what is built-in inflation?

Built-in inflation is related to adaptive expectations, where businesses and workers expect prices to rise, leading to wage increases and further price hikes.