When the Reserve Bank of Australia lifted its cash rate on Tuesday, with more rate rises in the pipeline, it did so ostensibly to combat an inflation rate swollen by petrol prices and gas bills, not by avaricious wage claims. Apart from a few beneficiaries, among them Pauline Hanson, the RBA’s move amounts to an act of pointless aggression against the majority of Australians.

An overheating economy is not the cause of the recent inflation spike. Its cause is a war of choice in the Gulf. Since US and Israeli bombs began falling on Iran, the strait of Hormuz has turned into a toll booth, shipping insurers have tripled their premiums, and tankers have been diverted around the Horn of Africa. In Australia, a tiny minority connected to the energy oligopoly raked in exorbitant profits while the vast majority felt the pain. The interest rate hike deepens the majority’s pain without delivering much gain.

There are two species of inflation, and central bankers have spent 40 years pretending there is only one. Demand-pull inflation occurs when households and firms spend more than the economy can produce: raise the price of money and you cool their ardour. Cost-push inflation is what happens when the price of an essential input is yanked upward by forces that have nothing to do with domestic demand: a war closing a shipping lane, a drought, a pandemic snarling supply chains. The price spiral now rattling through the Australian economy, courtesy of Donald Trump and Benjamin Netanyahu’s war on Iran, is........

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