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Types Of Inflation: Cause Based Inflation
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This lesson begins with a discussion of the types of Inflation: Cause Based and Rate Based Inflation. Through this lesson, you will get a clearer comprehension of these two types. The topics covered in this lesson are under Cause Based Inflation. Ayussh talks about its meaning, various types & their further elaboration along with various examples.

Ayussh Sanghi is teaching live on Unacademy Plus

Ayussh Sanghi
Passionate Educator - CSE / Other Govt Exams [Peep into my Unacademy Plus Courses & experience awesome learning.]
U
Unacademy user
Great Short to the point video on Fiscal Policy of India
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BS
Sir ,can i say that cost push inflation and pricing power inflation both are same?.Because in both the cases producers are increasing their prices.
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Sir in the example given of the onions , could only the demand of the onions can be called demand pull inflation because in the previous lect. it is said that only one good increase is not to be considered as inflation.
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Mukesh M
2 years ago
i think this is because onion price is continously increasing over a longer period of time due in adverse monsoon throughout the country.so demand pull inflation.
D
Dimpy
a year ago
but still the price of all goods and services are not affected by onions..so it should not be considered as inflation
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Dimpy
a year ago
it's just the price of onions that is rising
Thank you Sir........................ Thanks to unacademy.................................
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sir u told cost pull inflation is because of increase in price of raw material/worker wages,,,, then again in pricing power inflation u gave an example that car manufacturer will increase there price because of increase in price of steel,plastic??? isn't it same? as wheather there is finiancial crisis or not, they will increase the price if they are not getting profit/making cost... please clear my doubt -thanks
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Mukesh M
2 years ago
i think u should consider only profit margin for pricing power inflation
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  1. Inflation BY AYUSSH SANGHI Types of Inflation - Part 4.2


  2. ABOUT ME >Passionate about Teaching >Taught at most reputed Civil Services Institutes >CA, Lawyer Follow me on: https://unacademy.in/user/ AyusshSanghi


  3. Inflation can be divided in Types Inflation can be divided in types on the following basis: Cause Based Inflation Rate Based Inflation


  4. Cause Based Inflation Through this lesson we would understand the various types of inflation on the basis of cause: . Demand Pull Inflation Cost Push Inflation . Pricing Power Inflation Sectoral Inflation


  5. Demand Pull Inflation This type of inflation occurs when: Total demand for goods and services in an economy exceeds the supply of the same. .When the supply is less the prices ofthese goods and services . When the supply is less, the prices of these goods and services would rise, leading to a situation called as demand-pull inflation


  6. Demand Pull Inflation - Trivia . Demand Pull Inflation affects the market economy adversely during the wartime.


  7. Example Rise in prices of Onions . Due to the adverse monsoon the supply of onions decreased but Due to the adverse monsoon the supply of onions decreased but the demand among the masses remained the same. Thus as a result prices increased drastically and reached around Rs.80/Kg Hence increase in prices led to Demand Pull Inflation. led to Demand Pull


  8. Example Rise in prices of Onions In order to meet the excessive demand the government had imported the onions from Pakistan. - As the supply increases in the market the prices automatically decrease. Thus inflationary impact would reduce. The vicious circle of demand and supply controls the prices.


  9. Cost Push Inflation When there is increase in the cost of production of goods and services due to: increase or wages or raw materials cost. There will be a consequent increase in the prices of finished goods and services.


  10. Example High Petrol Prices . Ongoing increase in the prices of petrol is resulting in high inflation rate. Since petroleum is so important to developing economies, a large increase in its price can lead to the increase in the price of most products, raising the rate of inflation