BT Explains: What is cost-push inflation and how can governments address it?

THE US Federal Reserve’s 75-basis-point hike last week – the largest interest rate increase since 1994 – aimed to curb soaring inflation, which has hit decade-highs in the US and the European Union.

Yet such hikes chiefly target demand-side inflationary pressures, while today’s rising prices are fuelled by supply-side constraints.

The Business Times (BT) looks at the difference between demand-pull and cost-push inflation and the tools policymakers can use to contain it.