Increase in money supply only causes inflation if the money is spent on purchases of items with inflated prices (say, ferraris instead of basic food items).
When the basic food items become ferraris, people have no choice on that.
> Increase in money supply only causes inflation if the money is spent on purchases of items with inflated prices
The economy doesn’t work like that. You can’t inject money but only have it apply to specific sectors.
Everything is interconnected in the economy. If a lot of money comes into the market it will cause a lot of activity, changes in demand, new job openings that entice employees upward, increased wage demands for jobs, new hires requiring higher wages, rising costs to cover those wages, and the cycle goes on and on.
You can’t isolate the effects of inflation. At the scale of economies, inflation effects ripple through everything.
Also, eggs are a terrible indicator. Did everyone forget about the bird flu? It’s a supply problem.
When the basic food items become ferraris, people have no choice on that.