Pandemic stimulus party created inflation hangover

The report of the COVID-19 inquiry has concluded that the former Coalition government’s pandemic spending contributed to a spike in the inflation rate.

Economic modelling presented to the inquiry found that inflation would have peaked at around 6% with less stimulatory spending by the government and ultra-low official interest rates. Inflation instead reached a high of 8% in December 2022.

The report cites the HomeBuilder program as one of the factors that contributed to inflation. The inquiry also found that the JobKeeper scheme was necessary but poorly targeted.

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.