what is the wage price spiral 
the wage price spiral is a macroeconomic theory explaining the cause and effect relationship between rising wages and prices or inflation as rising wages increase disposable income demand for goods rises triggering prices for goods to move higher rising prices then increase demand for higher wages which leads to higher production costs and further upward pressure on prices creating a conceptual spiral investopedia julie banginflationthe wage price spiral describes the phenomenon of price increases as a result of higher wages when workers receive a wage hike they demand more goods and services and this in turn causes prices to rise the wage increase effectively increases general business expenses that are passed on to the consumer as higher prices a perpetual loop or cycle of consistent price increases is created the wage price spiral reflects the causes and consequences of inflation and it is therefore characteristic of keynesian economic theory the wage price spiral is also known as the cost push origin of inflation 