The question asks which indicators support an increase in inflation over the next 6 months.
One of the indicators is Global crude oil production which is increasing but it isn’t listed as factor that supports the inflation forecast. Why not? Isn’t oil production almost like a proxy for inflation?
No. Because crude can go up due to shortage in global supply as well.
The question is talking about production , not prices
But what does that have to do with inflation here ?
If production is increasing, most likely there’s more demand for oil. More demand for oil usually means that the economy is picking up. When the economy is picking up, inflation tends to increase.
what if there already is high demand for oil and there’s not enough supply to meet the demand ? would you still say oil production increase would drive inflation or indicate there is inflation ? this option has a lot of ambiguity in it. also as a producer if I forecast oil demand to increase and I produce more, but what if I overestimated and overproduced ? would that again lead you to think i drove inflation ?