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Higher costs for any inputs, not just wages, can drive it as well, no? Even if spending remains flat, that is, prices go up and people just buy less stuff while
by handrous 5y ago
Higher costs for any inputs, not just wages, can drive it as well, no? Even if spending remains flat, that is, prices go up and people just buy less stuff while spending about the same amount of money, or even spending less?
- bravo22 5y agoIf people buy less stuff that's a drop in demand and an increase in supply translating to lower prices. If input costs like energy go up, which affect virtually every item, then that can lead to higher inflation because the aggregate spending across everything can't drop.
- handrous 5y agoYes, I'm saying that rising input costs can cause inflation even in the face of falling spending, let alone flat spending. It's not just wages or spending that can cause inflation, right? Any inputs, including wages, can cause it, independent of spending. [EDIT] that is, yes, falling spending would have a "cooling" effect, but if costs for, say, productive land, go up fast enough, you can still see inflation in the face of falling spending.
- deleted 5y ago[deleted]