2026-11-02 06:42 UTC
ABC Tom Crowley tell us "In simple terms, inflation happens when an economy is operating above capacity. When the demand to spend is more than what an economy can supply, the extra demand pushes prices up." then instances the Middle East war.
https://www.abc.net.au/news/2026-11-02/government-spending-cuts-to-control-inflation-explained/107337846
How does this work?
Crowley doesn't tell us, but relies on the RBA
"The cause can come from anywhere.
Replies (1)
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@johnquiggin@aus.social 2026-11-02 06:42
The Reserve Bank thinks the resurgence of inflation in the past year has been driven by the Middle East war, an AI investment boom, and the fact Australia was already above capacity before those things." And the RBA says this because demand-driven inflation is the only thing it can deal with using interest rates. At one time, the response to imported inlfation would have been a currency appreciation. But that's no longer an option.