demand inflation meaning

[Business]
noun [U]

(Economics )

an increase in prices due to the fact that the demand for goods and services rises quicker than the amount of goods and services that can be supplied ⇨ COST INFLATION

[Economics]
Inflation due to excess demand. As resources are not perfectly mobile between different regions and sectors of the economy, demand inflation can occur even if the level of effective demand in the economy as a whole is below the level needed for normal levels of employment. The higher the aggregate level of activity, the larger the proportion of areas and industries which experience excess demand for goods and labour of various sorts, and the more powerful is demand-inflationary pressure. Demand inflation is contrasted with cost inflation, in which price and wage increases are transmitted from one sector to another. It is sensible to regard these as different aspects of an overall inflationary process: demand inflation explains how inflation starts; cost inflation explains why inflation once begun is so difficult to stop.

Examples

these are three : aggregate demand inflation and profits and performance of the corporate sector
There is no demand inflation at the moment because the economy is so slow.
Economist Robert J . Gordon has called this the " Triangle Model " because it explains short-run inflationary behavior by three factors : demand inflation ( due to low unemployment ), supply-shock inflation ( "'gUMC "'), and inflationary expectations or inertial inflation.