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this post was submitted on 07 Dec 2023
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Asklemmy
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Supply may or may not be able to adjust quickly.
A good example is food. There's only so much that can be grown and distributed. So a high demand for food year after year only pushes up the price. The supply can't really grow exactly. You can purchase more, import it, but that's still probably more costly than local production. So importing it may actually make the price higher even while the supply expands.
Also, organizations aren't required to produce more. In an economic environment where...idk...you once found t-shirts for $5 for three, Hanes can make it $6 for three because what else are you going to do? Buy Fruit of the Loom like a peasant, who is also charging more for their clothes?
So if production can't or won't expand and/or supply can't it won't expand, you'll have more and more money chasing the same amount of goods, which leads to inflation.