Can Advances in Technology Keep a Lid on Inflation?

In both the early 19th and early 21st centuries, the UK price level rose despite the deflationary bias from new technology.

Technology is advancing at a rapid pace, exerting downward pressure on prices. But will this deflationary bias be enough to offset the impact of a new, higher-inflation regime? History suggests that won’t necessarily be the case.

Many would argue that technology is advancing faster than at any period in human history. Whether that’s right or not is a debate for another day. After all, just about any era you care to choose since the Industrial Revolution began has had its share of new inventions. But there’s little doubt about the impact that technological change is having across a range of prices.