Will Oil Fuel the Flames of Inflation? | Nucleus Investment Insights

There has been a surge in the oil price following another outbreak of fighting in the Middle East. The question is, what does the rising oil price do to inflation? In the very short term, the answer is obvious: inflation will be higher. But most central banks exclude oil from the inflation series that they look at. But then, the path can head in two very different directions. Another round of oil-fueled inflation could mean that workers demand higher wages, and the cost-push inflation spiral will continue. Alternatively, paying more at the petrol pump might leave consumers with less to spend elsewhere… the higher oil price might be the last nail in the strong spending cycle we have seen since the pandemic.

 

In this week’s podcast, Nucleus Wealth’s Chief Investment Officer Damien Klassen, Chief Strategist David Llewellyn-Smith and Head of Advice Samuel Kerr examine the different paths and outcomes of this unfolding event.

 

Agenda:

  • Oil and geopolitical issues
  • Cost-push inflation
  • Demand destruction
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