One of the primary causes of demand-pull inflation is increased consumer spending.
When consumers have more disposable income, they tend to spend more money on goods and services, which leads to an increase in demand.
This can be due to a variety of factors, such as an increase in wages or salaries, tax cuts, or government stimulus packages.
When demand increases, businesses may struggle to keep up with the supply, leading to an increase in prices.
Another cause of demand-pull inflation is increased government spending.
When the government spends more money on goods and services, it increases the demand for these goods and services.
This can be due to investments in infrastructure, military spending, or social welfare programs.
As the demand for goods and services increases, prices may rise, leading to inflation.