Macro Analysis /
United Kingdom

GB : Strategy - What do we need for the wage-price spiral to accelerate?

    Joachim Klement
    Joachim Klement

    Analyst - Strategy, Accounting, and Sustainability (SAS)

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    CGS-CIMB
    31 March 2022
    Published byCGS-CIMB

    In the United States and Western Europe, inflation is at multi-decade highs and central bankers are rightfully afraid that high inflation might lead to high wage inflation and start a wage-price inflation spiral similar to that of the 1970s. But the link between inflation and wages is much weaker today than it was fifty years ago – and examining the reasons why gives us an understanding of what needs to happen to start a new spiral.