Energy Inflation Is the Most Difficult Type of Inflation to Control Not all inflation behaves the same way. Some inflation comes from excess demand — consumers spending too quickly while supply struggles to keep up. Central banks can usually address that type of inflation by raising interest rates and slowing borrowing. Energy inflation is different. When oil prices surge, the cause is often a supply disruption, geopolitical conflict, or transportation bottleneck. Monetary policy cannot produce more oil or immediately restore disrupted supply chains. That means central banks have limited tools to stop the spread of energy-driven price increases. Once energy costs rise, they quickly spread across the entire economy. Higher fuel prices increase the cost of: transportation manufacturing shipping agriculture…
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