Inflation warnings issued by the federal treasurer in the event of an escalation in the Middle East conflict have been dismissed by the opposition as smoke and mirrors. Opposition deputy leader Sussan Ley said the treasurer was engaging in 'a bit of smoke and mirrors' by attributing inflation to events outside the country. Dr Chalmers says Australia's inflation remains higher for two reasons. Firstly, it peaked lower and later here than in most comparable countries. Secondly, many nations were now experiencing higher unemployment, weaker growth or a combination of the two.