What factors can lead to an increase in demand for products or services, potentially causing inflation?

An increase in consumer income directly stimulates demand for products and services, as consumers typically have more disposable income to spend. When individuals have higher incomes, they are more likely to purchase not only necessary items but also luxury goods and services, leading to an overall increase in demand. This heightened demand can outstrip supply, which may lead to price increases and, subsequently, inflation.

In contrast, factors such as an economic downturn typically result in decreased consumer spending, while increased supply tends to stabilize or lower prices rather than push them higher. Stagnated wages can lead to constrained consumer spending, as individuals do not have the financial means to purchase more goods and services. Thus, rising consumer income stands out as the factor that effectively contributes to increased demand and potential inflation.