“The case for digital transformation has never been more urgent or clearer. Digital technology is a deflationary force in an inflationary economy.”
Satya Nadella
With inflation back and at the highest it’s been in decades, Satya Nadella used Microsoft’s latest earnings call to position digital technology as the solution for companies to help compensate for price increases.
The argument certainly isn’t a new one, technological innovation is widely known to be one of the best ways for companies to reduce costs and improve productivity.
In March 2020, Edward Yardeni positioned ‘Disruption’ as one of the four deflationary forces keeping a lid on inflation (the other three were Détente, Demography, and Debt).
Yardeni highlighted that the impact of technology on the economy had not been given enough attention adding, “technology is inherently disruptive and deflationary since there is a tremendous incentive to use it to lower costs across a wide range of businesses.”1
With recent inflation at uncomfortably high levels, digital technology and its associated productivity gains could take on much more prominence in 2022 and beyond.
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