A number of supply and demand factors in the economy:

➤⠀ accelerating demand for goods and services;

➤⠀increasing production costs;

➤⠀excess money supply in the economy;

➤⠀spiraling inflation - wages;

➤⠀increasing expectations about consumer price dynamics in the medium term.

High consumer price growth rates over a longer period of time induce costs in the economy, including:

➤⠀distortions in companies' investment decisions - when inflation persists at a high level, companies cannot concretely identify the dynamics of demand in their business segment;

➤⠀decreasing purchasing power of the population, with an impact on labour market productivity;

➤⠀ menu costs (determined by price updates);

➤⠀redistribution of income, from creditors to debtors.

You can find more details on all of the above in our Blog article: "Inflation now, a pungent". 🙂