Which factor can be a possible cause for rising prices or inflation?

Rising prices or inflation can often be attributed to an increase in the money supply within the economy. When there is too much money circulating, consumers have more funds available to spend, which can lead to higher demand for goods and services. If the supply of these goods and services does not increase correspondingly, sellers may elevate prices due to heightened competition among buyers for limited products or resources. This phenomenon is commonly referred to as demand-pull inflation, where increased demand pulls up prices.

In contrast, a decrease in consumer demand typically exerts downward pressure on prices, as sellers may lower prices to attract buyers. An increase in interest rates usually encourages saving rather than spending, which can also reduce demand and help to control inflation. Lastly, a reduction in production costs generally allows producers to supply goods at lower prices, potentially counteracting inflation rather than contributing to it.