No, prime minister, higher inflation was home-grown
Government forecasts are overly optimistic. The CPI peaking at about 6 per cent until mid-2023 is the legacy of the fiscal overcompensation for COVID-19.
Detailed economic modelling that I have been undertaking over the past year foreshadowed an inflation outbreak, and predicts that the outbreak will get worse before it gets better.
While labour supply disruptions from COVID-19 and the war in Ukraine have played a role, in Australia and the United States some of the inflation is home-grown from the overreaction of national fiscal policy to the COVID-19 recession.
