Over the past few decades, we have been witnessing gradual changes in the economic environment, many of which can be traced back to the ongoing IT revolution. These changes have important implications for inflation and pass-through, too. One such change is the growth of e-commerce, or, as some call it, the “Amazon effect”.
Many commentators argue that increased price transparency when shopping online has contributed to keeping inflation low in advanced economies.2 Whether the growth of e-commerce makes prices less responsive to wages is more debatable.