More jobs and higher wages increase household incomes and lead to a rise in consumer spending, further increasing aggregate demand and the scope for firms to increase the prices of their goods and services. When this happens across a large number of businesses and sectors, this leads to an increase in inflation.

demand pull inflation- Demand-pull inflation is when there is an increase in aggregate demand, and the supply remains the same or decreases. When supply cannot meet growing demand, prices for goods and services are pulled higher.

cost-push inflation-Cost-push inflation (also known as wage-push inflation) occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials. Higher costs of production can decrease the aggregate supply

The RBI is one of those central banks that are charged with targeting a certain level of inflation, come what may. It primarily does this by raising interest rates in the economy. Higher interest rates drag down economic growth because loans of kinds become costlier.

high inflation can be harmful (Hyperinflation) , too little inflation can also weaken the economy.(Deflation)

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