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The ‘Amazon Effect’ Might Have An Impact Over The Dynamics Of Inflation

Frequent changes in the prices of goods and increase in consistency of the pricing because of the rise in the number of the online retailers might be affecting the inflation, as per the academic paper which was presented before a few top most central bankers all over the world. Alberto Cavallo, who works as an associate professor in the Harvard said that in the last 10 years, the competition in the online retailing has increased the price change frequency along with the uniform pricing degree across all the location. He has carried out study in which he has compared how the traditional retailers and the online organized retail outlets like Walmart have responded to the emergence of Amazon.

In the paper which was delivered in the annular conference of the central bankers, he said, the pricing technologies based on the algorithms are popular in both the categories of the retailers and transparency which the Web has provided has also lowered the disparities in the pricing. A several policymakers of Fed have raised prospect which comparatively lower the levels of the inflation in the United States in the past few years owing to the strong economy because of the capability of a couple of organizations like Amazon in order to control the overall pricing. The current unemployment rate of the United States is around 3.9 % while economy of the country is witnessing the robust growth.

It is being the 2nd longest expansion over the records. The inflation measure which is preferred by the Fed is the PCE index which excludes energy and the food components. It had hit the target of 2 percent in the month of March but now it is showing signs that it won’t accelerate sharply. This is the kind of atmosphere where the retailers are forced to be nimble which leads to the lower margins.

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