What does monetary inflation primarily relate to?

Monetary inflation primarily relates to the increased money supply in the economy. This concept is rooted in the fundamental economic principle that an increase in the amount of money circulating within an economy can lead to a decrease in the purchasing power of that money, which ultimately results in higher prices for goods and services.

When a central bank, such as the Federal Reserve in the United States, decides to increase the money supply—often through mechanisms like lowering interest rates or purchasing government securities—this typically makes more money available for consumers and businesses to borrow and spend. As the money supply grows, if it outpaces economic growth, demand can exceed supply, leading to inflation.

This process illustrates why inflation is closely tied to the dynamics of money supply rather than external factors like supply chain disruptions, global economic conditions, or government intervention alone, which may affect prices but do not directly lead to monetary inflation.