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 ?
But for the growth of capital formation, profitability of the businesses, higher per capita income and increasing ratio of saving are the basic requirements, which are getting scarce in Pakistan due to the prevailing higher inflationary spiral.
The decisive steps taken by the Government along with decline in crude prices from its high levels in 2013-14 and benign global prices of tradables helped the economy to get out from inflationary spiral to relatively stable prices.
Chief executive Lord Wolfson said the impact of the Brexit vote on the pound "doesn't look like it's fuelling an inflationary spiral and is passing right through".
"PSG and Man City's funding by state-aid distorts European competitions and creates an inflationary spiral that is irreparably harming the football industry," LFP president Javier Tebas said in a statement on Monday.
The inflationary impact that will follow will almost certainly lead to demands for higher wages and we may we find ourselves in the sort of "inflationary spiral" common in the past.
The rise in the prices of goods and services would lead to a cost-push inflationary spiral,' Ecop said in a paper.
"I hope readers see the roots, that everything that existed then - from banks and the inflationary spiral to the burning of libraries - exists today," he said in an interview with the New York Times Book Review in 1983.
Industries, balance of trade and payments and capital formation have adversely been affected and the growing debt burdens and inflationary spiral have further overburden the country.
With a stream of new projects set to emerge from the pipeline this year, especially those from the government sector, this would have been enough to set off an inflationary spiral and stretch margins in the industry.
boosting growth and reverse the downward inflationary spiral.
Even in an environment of weak economic activity, food and energy prices can create an inflationary spiral. Natural disasters such as droughts or floods in food producing countries can spark inflation across the world, particularly in emerging countries where food represents a larger share of the inflation basket.
Emerging-market central-bank governors fear a US that alternates between expansionary policy that fuels huge hot-money inflows and a domestic inflationary spiral, and rapid tightening that chokes off credit and causes a domestic recession.