Inflation 1
Marovic and Daumer, (2020) suggest that inflation is rising at an alarming rate in the
economy. The higher rate of inflation in an economy has been affected due to general rise of
prices that have brought into place demand for commodities. However, recent consumer price
index has displayed higher reports on inflation with an increase of 0.4% in the recent.
Furthermore, inflation rate has various problems that can cause higher rate of inflation the causes
of inflation comprise of demand pull inflation, higher inflation expectations, rise in wages,
devaluation, and cost pull inflation. Cost pull inflation results from increased prices that are
applicable through manufacturing process of inputs in an economy.
For instance, when the expansion of money circulation intends to create a desirable boom
in oil prices, the energy caused can increase and contribute to the escalation of customer prices
thus reflecting on several inflation measures (Van, 2019). The unexpected deficit supply leads to
a flow in the production cost which in turn escalates the inflation rate. Higher inflation
expectation is another cause of inflation whereby, when expectations are low temporary increase
in prices tend to fade away. When inflation occurs, greater prices will cause employees to
demand for higher salaries thereby causing a salary wage price problem. Demand pull inflation
similarly affects inflation whereby it displays, a rise in aggregate demand thereby leading to an
increased level of prices.
The demand pull inflation can be caused by several factor that include higher wages,
increased customers confidence within the growth of an economy. However, devaluation intends
to increase the value of imported products thus boosting the local demand (Arbex et al., 2019).
Profit push inflation is another problem that causes higher rates of inflation whereby, if an
organization increases the price levels to acquire massive inflation rates there is a likelihood of
inflation occurrence during strong economic growth. Built-in inflation equally is a major cause
Marovic and Daumer, (2020) suggest that inflation is rising at an alarming rate in the
economy. The higher rate of inflation in an economy has been affected due to general rise of
prices that have brought into place demand for commodities. However, recent consumer price
index has displayed higher reports on inflation with an increase of 0.4% in the recent.
Furthermore, inflation rate has various problems that can cause higher rate of inflation the causes
of inflation comprise of demand pull inflation, higher inflation expectations, rise in wages,
devaluation, and cost pull inflation. Cost pull inflation results from increased prices that are
applicable through manufacturing process of inputs in an economy.
For instance, when the expansion of money circulation intends to create a desirable boom
in oil prices, the energy caused can increase and contribute to the escalation of customer prices
thus reflecting on several inflation measures (Van, 2019). The unexpected deficit supply leads to
a flow in the production cost which in turn escalates the inflation rate. Higher inflation
expectation is another cause of inflation whereby, when expectations are low temporary increase
in prices tend to fade away. When inflation occurs, greater prices will cause employees to
demand for higher salaries thereby causing a salary wage price problem. Demand pull inflation
similarly affects inflation whereby it displays, a rise in aggregate demand thereby leading to an
increased level of prices.
The demand pull inflation can be caused by several factor that include higher wages,
increased customers confidence within the growth of an economy. However, devaluation intends
to increase the value of imported products thus boosting the local demand (Arbex et al., 2019).
Profit push inflation is another problem that causes higher rates of inflation whereby, if an
organization increases the price levels to acquire massive inflation rates there is a likelihood of
inflation occurrence during strong economic growth. Built-in inflation equally is a major cause
