Inflation, Incidentally

Taxation is something like a game of hot potatoes, where those who are taxed try to pass on their burden to someone else before times runs out and the bill comes due.  Unlike a hot potato, however, a tax burden can usually only be passed along in chunks because most people aren't willing to take the whole thing from someone else. In economics, how this steaming tax potato gets divided is called tax incidence. To use an example, a retailer might respond to a higher sales tax by increasing her prices, thereby passing on the tax burden to her customers. Wary of losing business, however, she likely won't increase her prices enough to cover the full amount of the tax, and will end up shouldering some--if not most--of the burden herself.

Today as I was poring over the financials of a new fast food place in Kigali I'm consulting on, I noticed they had not only included an estimate of inflation, but also how much of the increase in inflation they planned on passing on to their customers. I'd never thought of "inflation incidence" before (and indeed, googling the term yields no relevant result), but given that inflation is just an implicit tax, it makes perfect sense.

The fast food place will, incidentally, serve its hot potatoes sliced and fried.