Two forces drive inflation. Demand-pull inflation occurs when too much money chases too few goods. When governments flood the economy with stimulus checks, people spend more, and prices rise because production cannot keep up.

Cost-push inflation starts on the supply side. When oil prices spike, transportation costs increase for every product. When wages rise faster than productivity, companies raise prices to maintain margins. The 2021-2023 inflation wave combined both forces.

Distinguishing the cause matters because the remedies differ dramatically. Demand-pull responds to interest rate hikes. Cost-push requires addressing supply bottlenecks, which monetary policy alone cannot fix.