Persistent high inflation can trigger a 'wage-price spiral,' where rising wages and prices feed into each other.

This is a dangerous feedback loop. As prices for goods and services rise, workers demand higher wages to maintain their living standards. Businesses, facing increased labor costs, respond by raising the prices of their products even further to protect their profit margins. This then prompts another round of wage demands, and the cycle continues. The wage-price spiral can be incredibly difficult to break once it takes hold, as each increase fuels the next. It contributes to sustained high inflation, making it harder for central banks to manage and often requiring more drastic measures to bring under control.