This is a situation in which a persistent rise, in prices leads to a rise in the cost of living and a demand of higher wages by the, workers to preserve their standard of living. Once the wage increase is effected, the prices of goods and services rise further leading to further  increase in cost of living and more demand for upward adjustment and the  process becomes continuous without an end.

This situation occurs when there is inflation in the  economy and all the economic agents try to protect themselves from the negative consequences of the initial price rise but in so doing, they instead worsen the inflationary conditions.