Cost-push inflation

Both accounts of inflation have at various times been put forward, with inconclusive evidence as to which explanation is superior.

It is argued that this inflation resulted from increases in the cost of petroleum imposed by the member states of OPEC.

Some economists argue that such a change in the price level can raise the inflation rate over longer periods, due to adaptive expectations and the price/wage spiral, so that a supply shock can have persistent effects.

Dallas S. Batten described it as a myth, writing "Though the cost-push argument is appealing on the surface, neither economic theory nor empirical evidence indicates that businesses and labor can cause continually rising prices", and identifying the real cause as "increased aggregate demand resulting from increased money growth".

[4] Milton Friedman criticised the concept of cost-push inflation,[5] writing "To each businessman separately it looks as if he has to raise prices because costs have gone up.