ВThe second domestic risk for inflation is what pressure the general increase in wages and pensions will have on prices. A cost of living adjustment is fine, it just preserves the real purchasing power of the recipients, but any increase above that is a risk in an inflationary environment. It is legitimate what the unions demand that wages should rise significantly, and I #agree with that, but in the long run, more wages come with more #work and greater #skills, that is, all of this defines the #productivity of labor. We suffer from chronically low labor productivity and this is a major determinant of wage growth. Let’s have no doubt that any wage growth that exceeds productivity growth will only affect #prices in the long run, so the standard of living will not improve in real terms.