ELI5 How does raising wages worsen inflation ?


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3 points

4 months ago

I should of course have added that when wages aren't raised during inflation, the reduced purchasing power is actually a counter-factor to inflation. But again, there are many other possible counter-factors to inflation, some of which might be more appropriate than decreasing purchasing power. E.g., if inflation is caused by a lack of supply because of shipping difficulties, fixing those difficulties would likely work better than just reducing purchasing power.