What is imported inflation?

Updated: 8/19/2022
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14y ago

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Inflation in other countries(trading partners)=>Higher input price for goods =>reduce competitive pressure on import-competing domestic goods price of domestic goods may increases. Alternative Way of looking at it: Country A trades with Country B. Currency B appreciates in relation to Currency A. Therefore, from Country A's point of view, it is more expensive to buy raw materials from Country B, but A will still buy raw materials because it is essential for production. As a result, the cost of production for goods increases due to a rise in price of raw materials. Hence, this will cause an increase in the general price level of goods and services in Country A that uses raw materials imported from Country B. Therefore, imported inflation occurs.

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12y ago

inflation is important because it's the increase the price on food, etc. It could affect the people lives and some people who can't afford it. Basically it shows the economy isn't doing so good.

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