What is the economic term for inflation caused by excessive demand exceeding an economy’s productive capacity?

The economic term for inflation caused by excessive demand exceeding an economy’s productive capacity is demand-pull inflation.

Demand-pull inflation occurs when households, businesses or governments seek more goods and services than firms can produce at existing prices. Sellers respond to scarce capacity by raising prices, especially when labor, equipment or key materials are difficult to obtain.

Strong consumer spending, expansionary fiscal policy, rapid credit growth and accommodative monetary policy can all contribute to demand pressure. Demand-pull inflation differs from cost-push inflation, in which prices rise because production inputs such as energy, wages or imported materials become more expensive.

Real economies can experience both mechanisms at once. For example, a supply disruption may raise costs while fiscal support keeps demand strong, producing a broader and more persistent inflation episode.