How does raising wages worsen inflation ?
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It’s a psychological effect as much as an economic one. The incredibly oversimplified version goes something like this:
The bread maker needs more money to pay himself and for the rising cost of his ingredients, so raises the prices.
The person that delivers the ingredients now needs more money to buy the bread, so wages increase and now needs to charge more for delivery.
As the bread maker now needs to pay more for delivery, they raise the price of their bread…
And repeat.
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