cost inflation

Show Summary Details

Quick Reference

In Keynesian economics inflation due to increases in particular prices or wage rates being passed round the economy. Increases in costs cause producers to raise prices; increases in prices cause workers to demand higher wages; and increases in wages in one occupation lead to demands for increases in others to restore differentials. The cumulative effect of all these processes leads to a cost-inflationary spiral, which it is extremely difficult to stop. See also demand inflation; wage–price spiral.

Subjects: Economics.

Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.