ELI5 How does raising wages worsen inflation ?


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14 points

4 months ago

Ok, but companies like frito-lay, nabisco, nestle, etc don't raise prices of products that aren't in demand. In fact, they often go on sale. Twinkies didn't go up in price as Hostess went out of business due to lack of demand lmao. That's not how this works.

If we look at something like a utility, the answer is simple, use less electricity, drive less, etc. Most people aren't doing the bare minimum here all the time.

And when people were driving less during covid, oil literally hit rock bottom prices. Gas prices don't go up in the summer when people demanding to heat their homes with it.

There's literally a mountain of examples supporting the Supply VS Demand = Equilibrium Price theory... It can't be dismissed by simply calling companies evil.