When asked why inflation has been so low for the past decade, Federal Reserve Chairman Jerome Powell had an interesting answer: the Amazon effect.
“It's a global phenomenon. We don't perfectly understand it. Since the [financial] crisis, a big factor that has been weighing down inflation is just the weakness in the economy. You had a lot of slack and the economy has not been tight,” Powell said during his testimony to the Senate Banking Committee, according to CNBC.
“There are other stories,” he added. “There's the Amazon effect story. There's global slack. The idea that slack around the word is affecting the tightness of the U.S. labor market. [It's] really hard to tie those down from an empirical standpoint, but they may be having some sort of an effect on inflation.”
Amazon generated 44 percent of all U.S. eCommerce sales last year, or about 4 percent of the country's total retail sales figure, according to data from One Click Retail.
During this past holiday season alone, a whopping 76 percent of online shoppers said they planned to do most of their holiday shopping on Amazon. Sixty-five percent search on Amazon always or a large part of the time, while 57 percent of consumers who search online at Amazon make a purchase always or most of the time.
But Amazon isn't the only factor contributing to the country's low inflation rate. Powell also spoke about how currency and energy commodity prices played a role over the last decade.
"We also had the strong dollar and lower oil prices in '14 and '15. That pushed down [inflation]," he said.