What type of inflation arises from an increase in production costs?

Cost-push inflation occurs when the overall price levels rise due to increases in the costs of production. This type of inflation is typically triggered by rising costs of raw materials, wages, or other inputs necessary for manufacturing and services. When producers face higher costs, they are compelled to pass these costs onto consumers in the form of higher prices for their goods and services.

In contrast, demand-pull inflation is driven by an increase in demand for goods and services, leading to higher prices when demand outpaces supply. Hyperinflation refers to an extremely high and typically accelerating rate of inflation, often exceeding 50% a month, resulting in a loss of currency's value. Stagflation refers to a situation where inflation and unemployment rise simultaneously, often while economic growth stagnates.

Understanding cost-push inflation is crucial for analyzing how production costs impact overall economic conditions, as it can signal underlying issues within the supply chain or labor market that may require policy adjustments or economic interventions.