Listen to a Business English Dialogue About Cost push inflation
Samantha: Hi Aaron, have you heard about cost-push inflation?
Aaron: Hi Samantha, yes, I’ve read about it. It’s when the cost of production increases, leading to higher prices for goods and services.
Samantha: That’s right, Aaron. Cost-push inflation can be caused by factors like rising wages, increased raw material costs, or supply chain disruptions.
Aaron: Exactly, Samantha. When businesses pass on these increased costs to consumers, it can result in a decrease in purchasing power and overall economic instability.
Samantha: Yes, Aaron. Cost-push inflation can also lead to a decrease in real wages and reduced consumer spending, affecting overall economic growth.
Aaron: That’s true, Samantha. Central banks often respond to cost-push inflation by tightening monetary policy to control price increases and stabilize the economy.
Samantha: Right, Aaron. By raising interest rates or reducing the money supply, central banks aim to curb inflationary pressures and maintain price stability.
Aaron: Indeed, Samantha. However, it’s essential for policymakers to strike a balance between controlling inflation and supporting economic growth to avoid damaging the economy.
Samantha: Absolutely, Aaron. It requires careful monitoring and appropriate policy interventions to address the root causes of cost-push inflation effectively.
Aaron: Yes, Samantha. It’s a complex issue that requires a coordinated approach from policymakers, businesses, and consumers to mitigate its adverse effects on the economy.
Samantha: Agreed, Aaron. By understanding the drivers of cost-push inflation and implementing appropriate measures, we can better manage its impact and ensure a more stable economic environment for everyone.