That seems like an effective way of creating self-reinforcing inflation.
For nearly any Good / Service the price is not 100% labor.
This means that if a price index (PI) goes up 2% and that causes a 2% increase in labor prices those labor prices will have a <2% increase in that PI. Lets be generous and say it has a 1% increase in that PI. That 1% increase will cause a 0.5% increase in the next PI iteration and next time it's a .25% and will effectively become 0% as the number of iterations increases.
The fact that prices aren't 100% labor is also why when looking at minimum wage increases the cost of a good doesn't increase by the same amount that minimum wage does. i.e. increasing minimum wage 20% (historically) doesn't increase a PI by 20%.