Global Inflation – 2nd Quarter June 2021

Inflation is the continuous increase in prices over time. This represents the increase in the price of goods and services offered by a country. As inflation increases it conversely erodes the purchasing power of a country’s currency.

There are generally two types of inflation, cost-push and demand-pull inflation. Cost-push inflation (decrease in aggregate supply) can occur from shortage of supply or due to increase in production cost (i.e. increase in wages or energy). Demand-pull inflation (increase in aggregate demand) is the result of increase in overall demand which can be generated from an increase in money supply or government spending among other drivers.

Current global inflation is as a direct consequence of both cost-push and demand-pull inflation.