Is Amazon Lowering The Global Rate of Inflation? (businessinsider.com)

An anonymous reader quotes Business Insider: Another investment bank analyst has signed on to the idea that the internet is holding down the rate of inflation. Bilal Hafeez, the global head of G10 FX strategy and head of EMEA research at Nomura, published two notes last month on whether the value of the dollar was being held down by Amazon and its ilk. In one note he called it "the Amazonization of inflation"... [O]nline commerce typified by Amazon is making the supply and distribution of goods so cheap that "Amazonisation" itself is now a deflationary force at a macro level, Hafeez argues. He writes: "While globalisation was the meme of the 2000s, this decade's has to be the 'Amazonisation' of commerce. Given the bulk of the cost of goods is distribution costs, Amazon's unique distribution model and widening range of products could impart a new disinflationary impulse on goods prices."

This idea is becoming more popular among analysts as the months roll by. Back in September 2016, we told you about the "Spotify problem," in an interview with HSBC's James Pomeroy. His theory is that the internet allows consumers to shop around and compare prices incredibly easily. It also substitutes cheap digital goods over more expensive physical ones. For instance, people stop paying £20 every month for a CD when they start paying £10 a month for endless music from Spotify. The result is that businesses are aggressively driving down their own prices because consumers simply won't go to the ones that charge more, and are no longer trapped into shopping in their own neighbourhoods. Sweden is so advanced as a digital economy that it may be importing its own deflation via digital shopping, Pomeroy argued.

Comments

Depends on what factors you use

[Z00L00K]

It all depends on what factors you use to calculate inflation.

For merchandise possible to purchase via Amazon, Ebay or other similar large scale web source then it's holding down inflation since prices are severely pushed down. But for other merchandise like food and similar that don't do well on Amazon and Ebay then inflation can be quite different.

Re:Depends on what factors you use

[Anonymous Coward]

It's not really reduced inflation as much as it is removal of the parasitic layers between seller and end user.

Re:Depends on what factors you use

[ShanghaiBill]

It's not really reduced inflation as much as it is removal of the parasitic layers between seller and end user.

It is reduced inflation BECAUSE OF the removal of the parasitic layers between seller and end user.

A capitalist class shell game

[Anonymous Coward]

1. Return on savings accounts: Abysmally low.

2. Have you seen a decent raise since the 80's? Not me... Not anyone I know. All decent raises happen at the C-level and above.

3. Have you noticed the price of housing, education and heath care are all skyrocketing? These are the essential things everyone needs. Will food be next?

4. What about that trend towards precarious employment (temps, gig work, etc.) have you been affected? Jobs are essential too.

5. All the stuff not required to live decently has not been inflating... (Well maybe except for cable TV, airline fares, and insurance).

6. Have you noticed the hyperbole in politics? This is a distraction to keep everyone from noticing the detrimental changes to society.

7. Have you noticed the government can't get anything done? Me too.

8. Have you noticed a trend to marginalize the rights of ordinary citizens? (Binding Arbitration, Non-compete agreements, Federal preemption)

9. Have you noticed a rise in hate groups, and religious zealotry, as well as attacks gay and transgender people? Hmmmm, this is like Germany in the 1930's.

Something nasty is bound to happen soon.

That's not what's driving houses out of your reach

[rsilvergun]

at least not in the United States. Here it's our aging population who've had their pensions and retirement funds raided the last 20 years. They've still got their savings though and they're using those to buy houses to flip and/or rent. That's also what caused the 2008 crash and why it was so bad. It wasn't poor people buying houses they couldn't afford. Those folks tried tooth and nail to hang onto their homes. It was upper middle class who'd over extended themselves in the house flipping market. When it became clear they weren't going to make back their investment they just walked away because they had no emotional attachment.

Basically it's baby boomers. We've left them with just enough money to be dangerous but not enough to live out their lives comfortably. They're gonna wreck our shit for the next 20 years until they die off...