Stagflation looms large

<p>Kia ora,</p><p>Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news Russia has <a href="https://www.nytimes.com/live/2022/03/07/world/ukraine-russia-war" target="_blank"><strong>a new brutal ploy</strong></a> in their invasion of Ukraine. It <a href="https://eng.mil.ru/" target="_blank"><strong>says</strong></a> civilians can flee, but only toward Russia, otherwise they will be bombed. Virtually no-one is taking up the 'offer'. <a href="https://www.unhcr.org/en-au/news/press/2022/3/62206a824/news-comment-1-million-refugees-fled-ukraine-week.html" target="_blank"><strong>The rush west is continuing</strong></a> despite the risks and threats.</p><p>Commodity prices keep on rising. Hard commodities like <a href="https://tradingeconomics.com/commodity/nickel" target="_blank"><strong>nickel</strong></a> and <a href="https://tradingeconomics.com/commodity/tin" target="_blank"><strong>tin</strong></a> who no signs of topping out. <a href="https://tradingeconomics.com/commodity/iron-ore" target="_blank"><strong>Iron ore</strong></a> is on the move up again. <a href="https://tradingeconomics.com/commodity/wheat" target="_blank"><strong>Wheat</strong></a> is the same. Your guess about where consumer prices and inflation are headed are about as good (or bad) as what professional analysts can muster. The speed of change, and the pervasiveness of it, is together unprecedented. Some analysts are <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Economics/2022/2022-03/er20220304BullCentralBanks.pdf" target="_blank"><strong>saying</strong></a> this is the time for central banks to step up and do their job by pushing back much more aggressively now.</p><p>There is certainly going to be much higher inflation. But it is hard to see any economic expansion in the near future. The result will likely be a long period of stagflation, at bes