Although the inflation rate is likely to be somewhat higher this year, inflation has been very tame during the last two decades. A big question is why. One potential answer is e-commerce. How might e-commerce impacted inflation, and is there any evidence it has?
- The “how” is very easy – e-commerce allows people to quickly and easily compare prices of alternative sellers
- Sellers know this, so suggests they will be more competitive on price
- However, to date, the evidence that e-commerce has been a major factor on keeping inflation relatively low is slim
- one reason is that, although expanding, only about 10% of total retail sales are done on-line
- also, the trends in inflation rates for traditional retail store sales and e-commerce sales have been very similar
- last, more rigorous analysis using statistical methods has yet to find a link of inflation trends to e-commerce
- but, still may happen