Can some one please explain this question to me? thank you!
On of the reason behind cost push inflation is increase in wages. If a company has to increase wages while output either remains same or doesn’t increase proportional to wage increase, it will put pressure on overall cost of production. Ultimately the higher cost is passed on to the consumer in the form of price increase.
If the labor productivity increases along with wage increase (as in this Q), the pressure on supply will be lowered, ultimately leading to less increase in price of product