What are the different types of inflation?

There are two types of inflation. The first, cost-push inflation, is where the RPI rises due to increased costs for firms across the macroeconomy. This could be down to a rise in the cost of imported raw materials, and what it leads to is producers passing on the increased costs in the form of higher prices to consumers.
The second is demand-pull inflation, which is where the demand for goods and services in an economy outweighs the productive capacity of the economy. In short, there is too much money chasing too few goods. This can be evaluated in detail using the Keynesian AD-AS diagram, where the degree of spare capacity in the economy dictates the rate of inflation.

TB
Answered by Tom B. Economics tutor

2036 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is cost push inflation?


Assess the policies that could be used to reduce the UK’s balance of trade deficit


Explain the Macro-economic benefits of globalisation.


What is meant by absolute poverty and analyse how access to clean water, or another essential item, is closely linked to production, income and wealth, within countries and between countries.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning