As Yogi Berra once said, "This is like deja vu all over again." 1970's economy looms over us once again.
Stagflation in the 1970s
The term "stagflation" -- an economic condition of both continuing inflation and stagnant business activity, together with an increasing unemployment rate -- described the new economic malaise. Inflation seemed to feed on itself. People began to expect continuous increases in the price of goods, so they bought more. This increased demand pushed up prices, leading to demands for higher wages, which pushed prices higher still in a continuing upward spiral. Labor contracts increasingly came to include automatic cost-of-living clauses, and the government began to peg some payments, such as those for Social Security, to the Consumer Price Index, the best-known gauge of inflation.

While these practices helped workers and retirees cope with inflation, they perpetuated inflation. http://economics.about.com/od/useconomichistory/a/stagflation.htm