Explaining the Causes of Inflation

In this episode, we unpack the key causes of inflation and explore how rising prices can stem from different sources. We delve into the three main types of inflation: demand-pull, cost-push, and inflation expectations, and explain how shifts in supply and demand, production costs, and consumer sentiment all play a role. We also examine how imported inflation via exchange rate changes can impact domestic prices, and why anchored inflation expectations are critical for central banks. Finally, we touch on the complex challenge of stagflation—when inflation and economic stagnation occur together. This episode is a must-listen for anyone looking to understand what really drives inflation in modern economies.