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Collective bargaining refers to a set of terms on which the employer offers individual work contracts to each employee in the bargaining trust. Usually unions resort to collective bargaining to protect the purchasing power of employees from price inflation. Many collective bargaining agreements have a provision of wage rates that need to be periodically adjusted based on the rate of increase of consumer prices. This provision or clause is known as cost-of-living escalator clause or cost-of-living adjustment (COLA) clause.
The Bureau of Labor Statistics issues the national consumer price index (CPI) in the United States and most escalator clauses are based on this price index. Some escalator clauses provide a limitation on the size of cost-of-living adjustments in wages and these are known as caps.
Usually collective bargaining occurs when rising inflation makes it hard to keep up with consumer prices. This prompts the trade unions to demand for higher wages which in turn further fuel inflation. It is this aspect which has led many economists to conduct research on inflation and collective bargaining.
Through research, economists have found that in collective bargaining, wages are set as a factor of price expectations and usually this is higher when inflation is on the rise. This causes a wage spiral and inflation then causes further inflationary expectations. Research on inflation and collective bargaining suggests that collective bargaining is a way of regulating the market and it is important for improving working conditions, achieving economic growth, equality and fair distribution of wealth.
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Imported inflation refers to the fact when imported raw or partly finished goods become more expensive than usual. Generally imported inflation occurs as a result of currency depreciation. 
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