cost-push inflation

Cost-Push Inflation

A phenomenon where general level of prices rise (inflation) due to increases in the cost of wages and raw materials.

Notes:

Cost-push inflation develops because the higher costs of production factors decreases in aggregate supply (the amount of total production) in the economy. Since there are fewer goods being produced (supply weakens), and demand for these goods remains consistent, prices of finished goods increases (inflation).

See also: Aggregate Demand, Aggregate Supply, Demand-Pull Inflation, Inflation, Profit Margin, Supply-Side Theory

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Cost-push inflation

Inflation caused by rising prices, usually from increased raw material or labor costs that push up the costs of production. Related: Demand-pull inflation.

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cost-push inflation

Rising consumer prices caused by businesses passing along increases in their own costs for labor and materials. Cost-push inflation does not necessarily result in rising corporate profits because businesses may be unable to pass through all of their cost increases. Compare demand-pull inflation.