Structural/bottleneck inflation meaning and causes

Structural  inflation  is  where  the persistent   increase   in  the  general   price  level  arises  out  of  supply rigidities  in the economy  which  keep down  the level of production.

Causes of structural inflation

1. The poor performance of the agricultural sector due to bad weather,   pests and diseases,   floods etc.
2. Break  down  of the  industrial  sector  for  example   due  to  depreciation    of  the  machines. This results into low production   and hence high prices.
3. Inadequate managerial and entrepreneurial skills which   result   in low production    leading   to increased prices.
4. Existence of political instabilities which discourage   both domestic   and foreign   investors.   This reduces output and hence high prices.
5. Speculation by businessmen who create artificial shortages by hoarding   goods.
6. Infrastructural break down in form of poor roads.
7. Scarcity of raw materials due to limited foreign exchange.   Producers   fail to import scarce raw materials hence low levels of production.
8. Political unrest
9. Structural breakdown of productive enterprises