Cost-push inflation
Definition. Cost push inflation is a sustained rise in the general price level caused by an increase in the costs of production faced by firms, which shifts the short run aggregate supply curve leftward. Higher wages, raw material prices or import costs reduce output while pushing prices up.
It is associated with stagflation, where rising prices coincide with falling output and employment. For an open economy like Singapore, imported inflation from costlier inputs is a major source.
This term belongs to Aggregate Demand and Aggregate Supply in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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