What does wage-price spiral mean?
What does wage-price spiral mean?
The wage-price spiral is a theory that indicates the interrelationship between an increase in wages and an increase in prices of goods, it is otherwise known as inflationary spiral. This theory represents a circle in which a rise in wages and prices mounts pressure on the economy, thereby causing inflation.
What causes a wage spiral?
A wage-price spiral is caused by the effect of supply and demand on aggregate prices. The rise in aggregate demand and the increased wage burden causes businesses to increase the prices of products and services. Although wages are higher the increase in prices causes workers to demand even higher salaries.
What are the determination of wages in Nigeria?
Generally, the wage rate is determined by the applicable collective agreement or the agreement between the worker and the employer. There is no preset criterion to determine the minimum wage.
What is the current inflation rate in Nigeria 2021?
17.75%
The inflation rate in Nigeria declined to 17.75% in June 2021 from 17.93 recorded in May even as food inflation rate came down to 21.83% from 22.28% within the same period.
Why is wage-price spiral bad?
While a wage-price spiral is unlikely, mild inflation above target driven by higher wages wouldn’t necessarily be bad, provided wage rises outstrip inflation. Given higher real wages are likely to stimulate productivity, wage increases don’t automatically translate into price increases.
Under what conditions is a wage-price spiral most likely to occur?
12 – A wage-price spiral is most likely to occur when an economy moves into a recession.
What are the stages in a wage-price spiral?
What are the stages in a wage-price spiral? Increase in wages, wage increases drive up population costs, producers raise price to pay for higher production costs, workers demand higher wages to pay higher prices.
What type of inflation are we experiencing in Nigeria?
Looking forward, we estimate Inflation Rate in Nigeria to stand at 12.50 in 12 months time. In the long-term, the Nigeria Inflation Rate is projected to trend around 12.00 percent in 2022 and 9.50 percent in 2023, according to our econometric models.
What is the interest rate in Nigeria?
| Nigeria Money | Last | |
|---|---|---|
| Interest Rate | 11.50 | [+] |
| Cash Reserve Ratio | 27.50 | [+] |
| Money Supply M0 | 2741262.67 | [+] |
| Money Supply M1 | 16016754.46 | [+] |
What is the definition of a wage price spiral?
The wage-price spiral is an economic term that describes how prices increase when wages increase. It is a phenomenon that occasionally occurs when the general prices for goods and services increase causing workers to demand a wage hike. A wage-price spiral is caused by the effect of supply and demand on aggregate prices.
What causes prices to increase in a spiral?
The rise in aggregate demand and the increased wage burden causes businesses to increase the prices of products and services. Although wages are higher the increase in prices causes workers to demand even higher salaries. If higher wages are granted, a spiral where prices subsequently increase may occur repeating…
Is the wage price spiral characteristic of Keynesian economic theory?
The wage-price spiral reflects the causes and consequences of inflation, and it is, therefore, characteristic of Keynesian economic theory. It is also known as the “cost-push” origin of inflation.
What happens to prices when wages go up?
The rise in aggregate demand and the increased wage burden causes businesses to increase the prices of products and services. Although wages are higher, the increase in prices causes workers to naturally demand even higher wages.