Why does everyone lose to cost-push inflation?

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Expert Solution

Cost push inflation is inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods. While the demand remains constant, the prices of commodities increase causing a rise in the overall price level. This is in essence cost push inflation.

Due to Cost push inflation , every item in the economy got expensive due to which buyer purchasing power falls and all the necessary items of the economy become expensive . That's the reason due to cost push inflation , every household have to face inflation and everyone lose his/her purchasing power in the economy .

Rahul Sunny answered 1 year ago

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