Inflation is caused by one of two things. Inflation that is driven by consumer demand is by far the most prevalent kind. In this case, the demand for a product or service is greater than the supply. Customers are prepared to pay more for the goods since they need it so badly. The second, less typical reason for inflation is an increase in the price of goods and services (Bohl, 2018). It is at this point that supply becomes constrained while demand remains unhindered. This occurred as a result of damage to gas supply lines caused by Hurricane Katrina in 2005. The need for gasoline did not alter, but the lack of supplies resulted in a $5 per gallon price increase.
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