Why Has Inflation Been so Low Since 1999?

16 Pages Posted: 7 Apr 2005

See all articles by Stephen Nickell

Stephen Nickell

University of Oxford - Nuffield Department of Medicine; Bank of England - Monetary Policy Committee

Abstract

In this paper, Stephen Nickell, member of the Bank's Monetary Policy Committee (MPC), explains why CPI goods prices have been falling in the United Kingdom since mid-1999. From 1999 to early 2001, the main factor was a squeeze on margins in the distribution sector. Since then, falling import prices have played a key role along with strong distribution sector productivity growth. Looking forward, while the latter should continue to play a role, import prices may well start to rise. This is consistent with CPI inflation moving up to the 2% target over the next two years.

Suggested Citation

Nickell, Stephen, Why Has Inflation Been so Low Since 1999?. Bank of England Quarterly Bulletin, Spring 2005, Available at SSRN: https://ssrn.com/abstract=698844

Stephen Nickell (Contact Author)

University of Oxford - Nuffield Department of Medicine ( email )

New Road
Oxford, OX1 1NF
United Kingdom

Bank of England - Monetary Policy Committee ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

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