Prices rise for many reasons, one of them being costs. Including. cost of production, transportation, of materials, of energy in production, and of the worker’s wages.
If any of these costs rise what happens? The producer/provider increases the price of the goods to cover this increase. This is then passed down the line until it reaches the shops where the consumer pays the final price. The consumer stage is the only stage where nothing is added to the price, the consumers are the only ones who lose money as they still have to buy the goods and services they need but with the same amount of money.
The money consumers have, in this model, will increase if they increase their costs through higher wages. They will then have more money to spend, but, in real terms they won’t because the prices in the shops have increased, creating a new equilibrium.
But also, an increase in wages is an increase in costs so … manufactures, producers, providers, retailers, transporters etc will increase their prices to cover this increase in wages. This will then lead to higher prices in the shops.
A price rising spiral !
How can this be stopped?
It would seem that it can only be stopped if costs are not passed on at one or all of the stages. But who would want to lose money? No-one. Ultimately someone has to take a common sense approach and either not raise their prices or, if they do, then by not as much. It should be the responsibility of everyone and everyone should bear the burden, not just the workers.
Man on a bike. 