inflationary spiral


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Related to inflationary spiral: Inflationary gap

inflationary spiral

or

price-wage spiral

a self-sustained increase in the rate of INFLATION brought about by the interaction of rising final prices and rising input costs. For example, an initial sharp increase in the prices of goods and services caused by an increase in raw material costs can lead to a demand for higher MONEY WAGES by trade unions concerned to protect their members’ living standards. If conceded, higher wage costs are soon likely to prompt manufacturers to put up their prices in order to maintain profit margins. The higher prices in turn produce further demand for wage increases, and so on. Once under way, price-cost increases tend to be self-reinforcing and are exacerbated by EXPECTATIONS of even further increases (see ANTICIPATED INFLATION). See ADAPTIVE EXPECTATIONS, EXPECTATIONS-ADJUSTED/AUGMENTED PHILLIPS CURVE, MONEY ILLUSION, REAL WAGES.
References in periodicals archive ?
Health care in the United States is caught in a self-reinforcing cycle of escalating costs, unaffordable care, rising numbers of uninsured, and greater reliance on late and intensive care, which in turn propels the inflationary spiral (1).
Central banks' highest priority should be to maintain their credibility as guardians of price stability, and only then turn their attention to keeping the economy near full employment, which they should do by influencing asset prices -- upward when unemployment threatens to rise, and downward when an inflationary spiral looms;
Central bankers have long recognized that it is imprudent to lower interest rates in pursuit of full employment if the consequence is an inflationary spiral.
Chandler's concluding chapters deal with the financial crisis of the 1970s, the inflationary spiral of the 1980s, and the recession and slow recovery of the 1990s.
As for stimulus funds, while the treasurer acknowledges that the influx can plug gaps in the short term, he worries that the new dollars could well trigger an inflationary spiral a year or more down the road that would remind many of the stagflation of the 1970s.
Second, we could, by pumping so many dollars into the economy, be setting the stage for a massive inflationary spiral.
Because if the credibility of policy is at stake over a perceived inability to avert deflation today, this will be as nothing compared with the spike in interest rates which will become necessary to restore credibility and contain the inflationary spiral which looms in front of us by 2011.
AaAaAaAaAaAaAa Central banks' highest priority should be to maintain their credibility as guardians of price stability, and only then turn their attention to keeping the economy near full employment, which they should do by influencing asset prices -- upward when unemployment threatens to rise, and downward when an inflationary spiral looms;
While the coming inflationary spiral will have a direct impact on commodity prices, other forces are at work that will add to the dilemma.
Nonetheless, the Bank Al Maghrib has stood strongly by its decision as part of its inflation-watching brief, without which increase, an inflationary spiral could emerge, undermining long-term growth prospects, according to the bank's council.
Alistair Darling issued a call for pay restraint when he addressed the TUC Conference, warning above-inflation rises risked sparking a damaging inflationary spiral.
Although the first quarter was challenging in respect of the deterioration of the GCC stock markets' performance, a nascent inflationary spiral that is impacting the overall cost structure for the industry in the region and increased overall competition.