Inflation caused by increasing production costs is known as what?

Inflation caused by increasing production costs is known as cost push inflation. This type of inflation occurs when the costs of production for goods and services rise, leading producers to pass those increased costs onto consumers in the form of higher prices. Factors that contribute to cost push inflation may include rising costs of raw materials, higher wages, or increased overhead expenses.

In contrast, demand pull inflation arises when demand for goods and services exceeds supply, driving prices up due to increased consumer spending. Cyclical inflation is tied to the economic cycle, where inflation may rise during periods of economic expansion and fall during contractions. Core inflation, meanwhile, strips out volatile items such as food and energy to provide a clearer view of long-term inflation trends. Understanding these different types of inflation helps in analyzing economic scenarios and predicting potential impacts on consumers and businesses.