Not surprisingly, phrases like “inflation is always and everywhere a monetary phenomenon” and “too much money chasing too few goods” are used to describe inflationary pressures. Supply shocks include unexpected shocks to the cost of production, natural disasters that affect the production and the supply chain, and intervention in markets through administrative measures.
Such factors typically have a temporary effect on the level of prices but do not influence the rate of change of prices, that is, inflation. Importantly, if such shocks continue to hit the economy at regular intervals, as is the case with reduction in electricity and petroleum subsidies in Pakistan, then their effect filters into other prices and fuels inflationary expectations.