Amazon effect: BOJ says online shopping pushing down core inflation


  • TECH
  • Monday, 18 Jun 2018

Amazon.com's logo is seen at Amazon Japan's office building in Tokyo, Japan, August 8, 2016. REUTERS/Kim Kyung-Hoon/File Photo

TOKYO: The spread of online shopping in Japan is dragging down consumer inflation, the central bank said, highlighting the “Amazon effect” on prices and the challenges policy makers face as they try to pull the world's third-biggest economy out of years of stagnation.

As bricks-and-mortar retailers lower prices to remain competitive with online shops, core consumer prices are being pushed down by 0.1 to 0.2 percentage point, the Bank of Japan said in a research paper on June 18.

Online retailers are able to charge lower prices because of the money they save by not operating physical stores, the BOJ said, citing research comparing prices in Japan and nine other countries.

Japan's consumer price index does not measure prices at online retailers, but it does capture prices charged at retailers with physical stores, and some of these retailers may be lowering prices to compete with their online peers, the BOJ said.

BOJ Governor Haruhiko Kuroda last week said the “Amazon effect” may place downward pressure on prices in advanced economies, because consumers can easily compare prices and buy the cheapest items available.

Amazon.com Inc, the world's largest online retailer, has increased its number of shipment centres in Japan over the past 10 years, which has lowered average distances and likely decreased shipping costs, the central bank said in its report.

Core consumer inflation decelerated to a 0.7% annual increase in April, disappointing economists inside the BOJ who expected inflation to accelerate toward the central bank's 2% inflation target.

Despite over five years of massive stimulus, inflation has remained stubbornly low in Japan with policy makers increasingly nervous about the de-merits of the prolonged easy policy.

The BOJ is expected to downgrade its consumer price forecasts at its next meeting in July, and economists say the central bank is already laying the groundwork for such a move.

“The impact of online shopping may become the BOJ's next talking point, but it sounds more like an excuse to me,” said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

“This is not a sufficient explanation for why prices in Japan have been rising less compared with other countries.”

Japanese consumers have been buying more clothes and daily goods online in the past few years, partly because more dual-income households are using e-commerce to save time, the BOJ said, citing government data.

The consumer price index shows prices for these goods are lower than prices charged for other items, which suggests that existing retailers are keeping prices low to avoid losing customers to Internet shopping.

The BOJ did caution that its calculation for how much downward pressure online shopping places on core CPI is based on limited data, and that it is important to closely monitor the trend in the future. — Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Next In Tech News

Apple debuts Beats Studio Buds, its AirPods for Android
Facebook should be broken up, Silicon Valley Democrat says
Rela denies automatic registration, to conduct internal investigation
Microsoft’s Smith says secret subpoenas hurt US tech companies
Chrissy Teigen apologises again for ‘awful’ resurfaced tweets: ‘I was a troll, full stop’
Top bosses at Australia's Nuix exit amid share price plunge, outlook cuts
A drone army is rising against ocean plastics
Women find helping hand to break into tech jobs in Germany
Singaporean automotive marketplace Carro says raises $360 million to become unicorn
Crypto sees second week of outflows; ether posts record outflows - CoinShares

Stories You'll Enjoy


Vouchers