Mainly inflation comes from excess money supply growth. There is too much money in the system chasing too few goods and services.

Over the long term, Nominal GDP = Money Supply x Velocity of Money = Inflation + Real Economic Growth

“Inflation is always and everywhere a monetary phenomenon.” –Milton Friedman.

You may also like “How to Get Inflation?” & “U.S. Core Inflation Expected Over the Next 21 Months.”

Image: Hedgeye Risk Management LLC