Opinion

Coronavirus and the threat of inflation

By Adam Triggs
Updated July 1 2021 - 5:33pm, first published May 11 2020 - 6:30pm
As lockdowns are eased, the surge in consumer demand could be a recipe for disaster. Picture: Shutterstock

Australians are desperate to get out of the house and back into restaurants, shops and gyms. But will businesses be ready? Their supply chains are in tatters and global trade has stalled, and some of them have closed altogether or soon will. A return of consumer demand combined with unprepared or higher-cost businesses could result in a leap in inflation. In fact, we've already seen prices rise in some parts of the economy. This puts the Reserve Bank in a tough spot and requires quick and ambitious reforms to ease the cost of doing business from a government whose reform credentials are largely untested.

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