Money supply has ballooned the most in peacetime history, outstripping the closest comparison of the GFC in 2008-2009. As government stimulus measures bypass banks and other delivery mechanisms to aid the speed of delivery, it is having flow-on effects.

“For the first time in a long time, you’re getting supply constraints,” says MLC Asset Management’s head of investments Al Clark.

He uses the example of wildly inflated domestic flights by domestic airlines – where Canberra to Adelaide tickets previously available for around $100 are now priced at $550 because of capacity constraints tied to coronavirus restrictions on the number of passengers allowed.

“As an investment industry, we’re sitting back thinking this might be transient, that once we get a vaccine this all disappears. But I’m not sure that’s the case,” Clark says.

In this video, MLC’s Clark explains the inflation implications of shifting supply chains, combined with constraints and bottlenecks across a number of industries and changing consumer behaviour.

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