News Paper Article:
Topic : Inflation
On reading this article, you will understand how inflation affects both the supplier company and the end consumer. The supplier company has to increase prices (resulting in inflation) to cover the increased input costs. This can in turn, affect its sales, resulting in lower profits.
Even if they do not increase the prices of their products, the profits are affected due to increase in Cost of production. So, at some point, they have to resort to increase in the prices.
Recall of Key words done in PennyWise:
Inflation- Inflation is the general increase in the prices of essential commodities. It leads to the fall in the purchasing power of money.
Cost Push Inflation- Cost-push inflation occurs when overall prices of commodities increase due to increase in the cost of wages and raw materials.
Since the demand for goods hasn’t changed, the price increases from production are passed onto consumers creating cost-push inflation.
My sense is that this inflation is more of a cost push than demand pull inflation.