Asia Unhedged has been a broken record on the issue of technology and inflation. Tech companies are making things cheaper and that is a long-term trend.
Bloomberg reports Wednesday that at least one Fed official, the Chicago Fed president gets the picture:
When online retail giant Amazon.com Inc. announced last Friday that it would purchase Whole Foods Market Inc., a plunge in retail and grocery stocks reinforced the disinflationary tone set by three straight months of disappointing data on consumer prices. It’s an example of the technological forces that are increasing competition and further limiting companies’ ability to pass on higher wage costs to customers.
“That normally indicates that somebody thinks that they are not going to be earning as much as they were,” Federal Reserve Bank of Chicago President Charles Evans said of the market reaction to the deal while speaking with reporters Monday evening after a speech in New York.
“For me, it just seems like technology keeps moving, it’s disruptive, and it’s showing up in places where — probably nobody thought too much three years ago about Amazon merging with Whole Foods,” he said.