Salary Increment Can Stimulate Inflation - Analyst

Chivore indicated that the increase in public workers salaries was a good move that needed to be reinforced by efforts to deal with inflation. The analyst cautioned that:

If we increase salaries without dealing with inflation we run the risk of having a wage-price-spiral. Salaries can be raised, but then prices will rise again then you raise salaries again we end up with a wage-price spiral.

Chivore added that organisations which use government pay grade as standard will imitate the government. Consequently, as Chivore notes, aggregate demand will be strengthened as consumer spending is expected to increase. The analyst suggested the use of non-monetary gratuities.