The Impact of the Internet on UK Inflation - speech by Sushil Wadhwani

In a speech delivered to the LSE Business Society today, Monetary Policy Committee Member, Sushil Wadhwani, discussed the impact that the internet was likely to have on productivity, profit margins, unemployment and inflation.
Published on 23 February 2000

Dr Wadhwani argued that the potential benefits of business-to-business e-commerce, the likely growth of the IT sector, and the recent pick-up in the trend of US productivity growth were all reasons for believing that productivity growth in the UK would possibly be higher in the coming years. He also felt that pressure on margins would be large and long-lasting, though the size of these effects were necessarily uncertain.

At the same time, Dr Wadhwani emphasised that although “the internet has important disinflationary effects, it does not imply the death of inflation”. Hence, it remained important to continue to monitor a host of other potential influences on inflation when setting policy.

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