ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Consequently, consumers pay more to buy the same imported products and firms that rely on imported materials in their production processes pay more to buy these inputs. The price increases of imported goods and services contribute directly to inflation through the cost-push channel.

Detailed explanation-2: -What is imported inflation?-The rise in global price of certain essential goods or global boom will cause the price of imports to rise which will lead to a rise in cost of living and cost of production, contributing to cost-push inflation.

Detailed explanation-3: -The main causes of inflation can be grouped into three broad categories: 1. demand-pull, 2. cost-push, and 3. inflation expectations.

Detailed explanation-4: -Examples of Cost-Push Inflation Electric power suppliers need high levels of natural gas to create electricity. When global policies, war, or natural disasters drastically reduce the oil supply, gasoline prices rise because demand remains relatively stable even as supply shrinks.

Detailed explanation-5: -ABS head of prices statistics, Michelle Marquardt, pointed out this figure was a drop from the 8.4% rise for the year to December 2022, however, it is well beyond the RBA’s inflation target of 2-3%. The figure does indicate that rate rises are starting to have an impact on the economy.