Price/wage spiral

In macroeconomics, the price/wage spiral (also called the wage/price spiral or wage-price spiral) represents a vicious circle process in which wage increases cause price increases which in turn cause wage increases, possibly with no answer to which came first. It can start either due to high aggregate demand combined with near full employment or due to supply shocks, such as an oil price hike. There are two separate elements of this spiral that coexist and interact: