CAUSES OF INFLATION: UPSC Daily Important Topic | 12 October 2021

November 12, 2021

CAUSES OF INFLATION

Topic: Inflation

DEMAND-PULL INFLATION

This type of inflation is caused due to an increase in aggregate demand in the economy.

COST-PUSH INFLATION

This type of inflation is caused due to various reasons such as:

Increase in price of inputs.
Hoarding and speculation of commodities.
Defective supply chain.
Increase in indirect taxes.
Depreciation of currency.
Crude Oil price fluctuation.
Defective food supply chain.
Low growth of agricultural sector.
Food inflation.
Interest rates increased by RBI.

BUILT-IN INFLATION

This type of inflation involves a high demand for wages by the workers which the firms address by increasing the cost of goods and services for the customers.