CAUSES OF INFLATION: UPSC Daily Important Topic | 4 June 2023

June 5, 2023

CAUSES OF 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.