What term describes inflation caused by rising production costs, such as wages or energy prices?

Inflation caused by rising production costs, such as wages or energy prices, is called cost-push inflation.

The mechanism begins when the cost of producing goods or services increases. Businesses may respond by raising prices to protect profit margins. If many industries face higher input costs at the same time, the overall price level can rise even when consumer demand is not unusually strong.

Energy shocks, supply shortages, higher wages, taxes on production, and disruptions to transport can all contribute. The 1970s oil shocks are a classic example often discussed in connection with cost-push pressures, although inflation during that period also reflected monetary and demand conditions.

Cost-push inflation is commonly contrasted with demand-pull inflation, which occurs when demand grows faster than the economy’s ability to supply goods and services. Real-world inflation can involve both mechanisms simultaneously.