The Reserve Bank of Australia (RBA) has been accused by The Australia Institute (TAI) think tank of a “dereliction of duty” by rejecting the role of excess profits as a cause of inflation.
The Institute is at odds with RBA governor Philip Lowe over the issue, with Lowe last week telling the National Press Club that “rising profits are not the source of the inflation pressures we have”, while continuing to warn of a non-existent wage-price spiral.
Authors Greg Jericho and Jim Stanford note that a previous TAI report “showed that 69% of excess inflation (above the Reserve Bank’s 2.5% target) since end-2019 arose from higher unit corporate profit margins, while only 18% was due to labour costs”.
