Demand-Pull

"Demand-pull" is the classic explanation of inflation: There is enough demand for what you're selling that you can raise your prices, and the customers just keep on coming.

Okay. That could happen. I don't think it has happened in the USA, not for a long time. I think the only evidence for it is that there was "inflation." But suppose demand-pull inflation does happen. Is your retail business better off, or worse because of it?

Better. You raise your prices because you can. Your profits are good. Pretty soon, you are expanding and hiring more help.

Does that sound like where we are today? Not so much. Because we don't have demand-pull inflation.

We have cost-push inflation. Profits are squeezed. You raise your prices because you have to. Money is tight. Fewer customers stop in, and few of them buy. Times are not so good. This is cost-push inflation.

You can tell the kind of inflation we have, by the state of the economy.