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Speaker 1: Now, if Nikola Willis's worst case scenario of three point

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Speaker 1: seven percent inflation as a result of the Iran wall

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Speaker 1: didn't sound that bad to you, it didn't sound that

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Speaker 1: bad to economists Cameron Bagriy either, who isn't so sure

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Speaker 1: that that is necessarily the worst case scenario, and he's

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Speaker 1: with us. I can oh, good evening, right, what do

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Speaker 1: you think is the worst case scenario?

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Speaker 2: Look, I wouldn't put a worst case scenario on it,

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Speaker 2: because who really has any idea how high or prices

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Speaker 2: are going to go or how long this tension, the

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Speaker 2: situation in regard to humves is going to last. All

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Speaker 2: I put out there is it? Three point seven seems

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Speaker 2: like a baseline number to me? You know, I note

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Speaker 2: that A and Z's come out and they now expect

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Speaker 2: inflation to go to three point six bean Zed's three

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Speaker 2: point eight. You know there'll be a risk profile around that,

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Speaker 2: both up and down, a higher than lower. So the

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Speaker 2: three point seven seemed like a mid range number as

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Speaker 2: opposed to the worst possible outcome to me, I.

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Speaker 1: See what you say. You also say in your piece,

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Speaker 1: if you wanted worst case scenario numbers start by double

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Speaker 1: three point seven, But that is just throwing an arbitrary

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Speaker 1: number around. But are you suggesting we should be looking

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Speaker 1: more at seven points something?

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Speaker 2: No, I wouldn't say looking at it, yeah, because these

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Speaker 2: are these are just scenarios, and scenarios have got different probabilities.

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Speaker 2: So yeah, the worst possible outcome might have a probability

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Speaker 2: or I don't know, anything up to five percent, so

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Speaker 2: bad event but with a low probability, but it will

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Speaker 2: still have a positive probability. Yeah, and it's a possibility

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Speaker 2: as opposed to a probability. So look, I just look

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Speaker 2: at the COVID shop. You know what, a COVID shop

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Speaker 2: deliver a number up around seven percent, higher numbers and

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Speaker 2: other sort of jurisdictions around the globe. So you can

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Speaker 2: probably take some sort of guidance from that. You can

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Speaker 2: do ready rettenas in regard to if oil prices get

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Speaker 2: up one hundred and fifty bucks a barrel and they

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Speaker 2: stay there for an elongated sort of period. But I

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Speaker 2: think the biggest thing here is are we going to

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Speaker 2: start to see some second round effects? Because if you

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Speaker 2: look at the primary channel, fewer prices go up. We

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Speaker 2: theen to focus on petrol and people's got a three

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Speaker 2: point five percent weight and the CPI s you get

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Speaker 2: thirty percent jump and petrol, which is what we're sort

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Speaker 2: of it looks like we're going to see you get

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Speaker 2: one percentage points to inflation. Yeah, so that probably gives

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Speaker 2: you the three point seven number that Ye Trees is

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Speaker 2: put on the table. But because we can see more

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Speaker 2: diesel than petrol, and diesel flows into what's called producer

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Speaker 2: price inflation. That's what producers face. And if producers costs

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Speaker 2: are up I transport costs, were they going to pass

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Speaker 2: those price increases on? You pass those prices increases on

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Speaker 2: a getting goods to the supermarkets, then you start to

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Speaker 2: see supermarket inflation start to start to rise. Yes, So

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Speaker 2: it's those secondary channels that I'm not quite sure that

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Speaker 2: Trees is taken sufficiently into account. There's a lot of

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Speaker 2: pressure out there on businesses in regard to margins, and

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Speaker 2: margins drive profitability, and the margins have come under pressure.

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Speaker 2: I just got a sneaking suspicion if they've got a

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Speaker 2: reason to push up prices under the guise of what's

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Speaker 2: going on in her moves around the globe, firms are

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Speaker 2: going to use that excuse and try to jam through

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Speaker 2: some price rises, We've seen it before.

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Speaker 1: What do you think that this? Okay? So if you

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Speaker 1: if you're thinking three point seven is maybe the baseline,

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Speaker 1: then then what are you anticipating this does to our GDP?

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Speaker 2: Well, the good news is that the economy is actually

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Speaker 2: we're out of recession. We've got reasonable momentum, and that's

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Speaker 2: important because if you're on your knees, you can get

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Speaker 2: knocked around an awful lot more than if you've got momentum.

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Speaker 2: You've got and we are on a steady path get

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Speaker 2: back to what we call sort of normality, but we're

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Speaker 2: still coming out of a bit of an economic sort

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Speaker 2: of whole. But once again, this comes down to the

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Speaker 2: intensity of the shop, how long, how prolonged it is

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Speaker 2: going to sort of be. You can put helter skelter

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Speaker 2: sort of your scenarios out there. What say we start

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Speaker 2: to see wrestling, and you start to see wrestling, and

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Speaker 2: then you start to see COVID style types of economic

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Speaker 2: consequences out there, and now we hope you don't go

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Speaker 2: down that route. But the longer this destruction takes place,

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Speaker 2: the fear that we rest running down our all surprise

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Speaker 2: and what are we at the moment about forty nine

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Speaker 2: days on land plus on water. We'll see where things

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Speaker 2: stand in about another week.

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Speaker 1: Cam, it's always good to talk to you. I appreciate it,

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Speaker 1: mate this Cameron Bagriy, Independent Economists. For more from Hither

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Speaker 1: Duplicy Allen Drive, listen live to news talks it'd be

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Speaker 1: from four pm weekdays, or follow the podcast on iHeartRadio