Question

Cost push inflation arises due to __________.

• A. persistent rise in factor cost
• B. mismatch between demand and supply of commodities
• C. combine phenomena of demand pull and cost push inflation.
• D. increase in price of precious metal.

Answer 1

The correct option is A persistent rise in factor cost

Cost push inflation is an economic situation where the general price level in the economy for all the relevant goods and services has a constant appreciable rise over a considerable period of time due to continuous rise in the factor cost of the commodities in the economy which can arise either due to increase in the price of raw materials or due to demand for increase in the wage of the labors that creates the situation of wage-price spiral.