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Economics vocabulary · Inflation and Prices

Demand-pull inflation

Meaning in economics, with examples

nounAdvanced term

In economics, demand-pull inflation means: Inflation that happens when total demand in the economy grows faster than the supply of goods and services, often summed up as too much money chasing too few goods.

In Turkish: talep enflasyonu, talep kaynaklı enflasyon

How it is used

Typical causes are fast credit growth, large fiscal stimulus or an export boom. Because demand is the source, central banks fight it by raising interest rates to cool spending. Compare cost-push inflation.

Example sentences

  1. Cheap credit and rising wages led to demand-pull inflation.

  2. Rate hikes work best against demand-pull inflation.

Common collocations

  • demand-pull pressures
  • demand-side inflation
  • too much money chasing too few goods
  • cost-push inflationInflation caused by rising production costs, such as higher energy prices, wages or import costs, which firms pass on to their customers.
  • aggregate demandThe total spending on goods and services in an economy at a given price level: consumption, investment, government spending and net exports added together.
  • overheatingA situation in which demand grows faster than the economy can produce, leading to rising inflation, labour shortages and often a large current account deficit.
  • inflationA general and continuing rise in the prices of goods and services in an economy, which means each unit of money buys less over time.
  • rate hikeAn increase in the central bank's main interest rate, usually made to cool demand and bring inflation down.

More terms: Inflation and Prices

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