what is speculation and how is it responsible for inflation?

Speculation arises when people start expecting. This can be understood by the following example:- 
We know that high money supply leads to higher price. Now, suppose people are expecting RBI to increase money supply. This will induce them to ask for higher wage from firms. As wages the are the main constituent of cost so cost will increase. The firms will then try to cover their cost by increasing prices which again will force labour to ask for higher wages. This ultimately will result in a wage price spiral.
Hence, as seen in the given example, what happened here is that people were expecting a rise in the prices which thereby resulted in an actual increase in the prices. So, we can say that speculation leads to inflation.

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