‘We don’t want this’: Economist warns of inflation ‘snowball’

Economist Professor Steven Hamilton has warned of the potential “snowball” inflation could have on the economy.

Australia’s unemployment rate in February dropped from 4.1 per cent to 3.7 per cent, according to the Australian Bureau of Statistics.

“One thing that you worry about is if markets are too tight … if there’s too much demand in the economy based on the supply that the economy can deliver, that pushes prices up, and that’s where we get inflation,” Mr Hamilton told Sky News Australia.

“The concern is that that begins to kind of cycle, that prices rise, workers push for bigger wage increases, and then firms pass those higher wages on in higher inflation, and that kind of cycle increases the kind of inflationary wave and makes it a lot harder for the Reserve Bank to have to jack up interest rates.

“We don’t want this snowball – we’ve been trying to avoid that.”

Видео ‘We don’t want this’: Economist warns of inflation ‘snowball’ канала Sky News Australia