Cost-Push Inflation Law and Legal Definition

Cost-push inflation is a type of inflation caused by rising prices, which follow on the heels of rising costs. The costs of important goods or services are substantially increased when no other suitable alternative is available. For example, when the demand for raw materials exceeds the supply, prices go up. As manufacturers pay more for these raw materials, they raise the prices they charge merchants for the finished products and the merchants in turn raise the prices they charge consumers causing a rise in the general price level.