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On the effect of e-commerce’s spread on inflation

Author

Listed:
  • Mućk, Jakub
  • Błażejowska, Aneta
  • Łapszys, Karolina
  • Szafranek, Karol

Abstract

Online purchasing has become a prevalent form of shopping in many economies, raising questions about its impact on price dynamics. We contribute to the literature by quantifying this effect. To this end, we employ unique data on the penetration of e-commerce transactions in retail trade and estimate a dynamic panel data model on annual data for 24 European economies and the US using a bootstrap-based bias-corrected framework. We document that rising popularity of e-commerce acts in a disinflationary manner – a 1% increase in the spread of online transactions in retail trade lowers headline and core inflation by roughly 0.03 pp and 0.02 pp on impact and by 0.05 pp and 0.04 pp over the long term. In cumulative terms, over the 2004–2024 period, rapid e-commerce expansion has lowered the overall price level across all economies by 10%, on average.

Suggested Citation

  • Mućk, Jakub & Błażejowska, Aneta & Łapszys, Karolina & Szafranek, Karol, 2025. "On the effect of e-commerce’s spread on inflation," Economics Letters, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:ecolet:v:254:y:2025:i:c:s0165176525003015
    DOI: 10.1016/j.econlet.2025.112464
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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