What is wage push inflation?
Wage-push inflation, also known as cost-push inflation, occurs when increases in wages lead to higher production costs for businesses. This, in turn, prompts them to raise prices to maintain their profit margins. It’s called “wage-push” because the upward pressure on prices originates from the increased labour costs. Here’s how it typically unfolds: Wage Increases: Wages rise across the economy, often due to factors like strong labour demand, labour union negotiations, or government-mandated minimum wage hikes. Higher Production Costs: With higher …