Wage-push inflation

Wage-push inflation

Inflation caused by skyrocketing wages.

Wage-Push Inflation

Inflation caused by increased costs as a result of higher wages. To give an extreme example, suppose a state raises its minimum wage from $5 per hour to $30 per hour. In order to be able to pay workers, an employer is forced to significantly increase the prices on his/her products. This in turn makes goods and services more expensive, and the $30 per hour suddenly lacks the purchasing power it had when the minimum wage was $5 per hour. Soon, it is no longer sufficient to purchase necessary goods and services and the minimum wage must be raised again. The cycle starts over, creating an inflation spiral.
References in periodicals archive ?
True, he showed a lower deficit target than in 2009-10 but, by releasing such a massive amount under salary rise, he has ignored wage-push inflation.
The number, though overshadowed by worries of weak economic growth, did reawaken prior concerns over wage-push inflation, with Richmond Fed President Broaddus calling it a "small reminder" that price risks remain.