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Stephen Grenville

Micro-pricing a big puzzle in inflation’s persistence

The real world of price setting doesn’t look much like the supply and demand schedules of Economics 101.

Inflation in the post-COVID period has surprised forecasters worldwide. When the dust settles, postmortems should improve our understanding of the inflationary process. Allan Fels has agreed to chair the ACTU’s price-gouging inquiry.

At the macro level, economists will reassess the roles of demand, supply, policy settings and the factors which can give inflation ongoing persistence – mainly expectations about future inflation.

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Stephen Grenville is a former deputy governor of the Reserve Bank of Australia and a non-resident fellow of the Lowy Institute.

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    Original URL: https://www.afr.com/policy/economy/micro-pricing-matters-to-the-persistence-of-the-inflation-challenge-20230810-p5dvgz