On an Amazon Inflation Irony

At any previous time in history, the pandemic, with the resulting lockdowns, would have resulted in a sharp decline in the demand for goods. Consumers would have been unable to visit stores to buy anything. Prices would have declined in response to the drop in demand. We would have experienced a sustained bout of deflation.

But enter Amazon, which made shopping from home a realistic possibility. Services were mostly out of reach, but goods could be purchased, and were. Consumers consequently diverted their purchases from services to goods. The result was inflation, not deflation.

And so, a company that made the buying process more efficient, and reduced price levels under normal conditions, was partly responsible for the ongoing, and largely unexpected, burst of inflation.