The 2 main types of inflation are Cost-Push Inflation and Demand-Pull inflation. When there is significant inflation in important services and goods where there is no availability of suitable alternatives, it is known as cost push inflation. Due to reduced supply, the cost of production increases, thereby leading to higher prices. You can read about Inflation in Economy- Types of Inflation, Inflation Remedies, Effect of Inflation in the given link.
When the aggregate demand outweighs the aggregate supply then it leads to demand-pull inflation. When the demand is more, the prices are more.
- Indian Economy Notes for UPSC Civil Service Exam
- Monetary Policy – Objectives, Monetary Policy Committee, Instruments of Monetary Policy