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AS Macro Key Term: Inflationary Pressure
5th April 2011
Inflationary pressures refers to the demand and supply-side pressures that can cause a rise in the general price level. Demand-pull inflationary pressure is greatest when actual GDP exceeds potential GDP causing a positive output gap. Cost-push inflationary pressure can arise from increases in unit wage costs, rising import prices and an increase in the prices of raw materials, fuel and components used in production.
Cost push inflationary pressures
Input prices for UK manufacturers
Data from Timetric.
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PPI, Input prices of all materials & fuel for manufact., month, UK from Timetric
Unit labour cost inflation for the UK
Data from Timetric.
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United Kingdom from Timetric
UK Output Gap
(Difference between actual and potential GDP, expressed as a % of potential GDP)
Data from Timetric.
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United Kingdom from Timetric
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.