Day to Day Economics

Anatomy of Inflation

What is inflation… Inflation is a sustained and overall rise in the

general price level.

• Demand-pull inflation.• Cost-push / Supply shock inflation.

Case Study

The formation of the OPEC in 1960 and the subsequent price rise in oil lead to a major increase in the cost of production of many energy-related commodities leading to a supply shock all over the world and consequently a cost-push inflation.

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