It’s inflation Jim but not as we know it

Covid-19 is being blamed for many things; some of which are fair, but others not so much. One such is the current ultra-low interest rates and ramp up in fiscal spending around the world.

It is true that the economic fall-out from the pandemic has prompted central banks to cut rates to near zero (and sub-zero in some cases), and it is also true that fiscal balance sheets around the world are being put to (more) work for the same reason.

However, had we had an economic down turn for any other reason (which is quite probable after a decade of growth since the GFC), the same policy decisions and tools would have been applied – perhaps in differing speeds and quantities, but the same nonetheless. Hence, this article is not about Covid-19 or the economic fallout therefrom.

This article discusses the changing drivers of inflation, and how it hasn’t died – it is just showing up in different places.