In recent testimony before the Senate Committee on Banking, Housing, and Urban Affairs, Chair of the Federal Reserve Jerome Powell explained that concentration and inflation are not related: 

Retail and tech have driven “very high productivity” and “very low inflation,” points out Federal Reserve Chair Powell.  “At the aggregate level, the connection between concentration, for example, and inflation is really not clear. Some of the most—some of the industries that had a lot of consolidation were the very ones that drove low inflation over the last 25 years, you know, retail and wholesale, consolidated a whole bunch and a bunch of technology went in and that’s where there was very high productivity and very low inflation.”

Chairman Powell’s remarks come within a week of a recent letter to Democrats from Senate Majority Leader Chuck Schumer (D-NY) and President Biden’s State of the Union address—both of which highlighted the need to combat rising costs and inflation. Notably, neither included technology or retail as examples of sectors where costs are rising.

These events echo remarks by other prominent economists who have voiced concerns about recent attempts to address inflation through aggressive antitrust enforcement.

Antitrust as an anti-inflation policy reflects “science denial” and neo-Brandesian antitrust is more likely to raise than lower prices, explains Former Treasury Secretary Larry Summers. “The emerging claim that antitrust can combat inflation reflects ‘science denial’. There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.” 

— Summers continues: “However, as described, hipster Brandesian antitrust, with which the Admin and its appointees flirt, is more likely to raise than lower prices.” 

In reply to Summers’ tweets, former OMB and CBO Director Peter Orszag tweeted: “Count me on @LHSummers’ side here.”

In the midst of increased prices across most food and energy products, inflation remains low in the digital sector, notes Michael Mandel of the Progressive Policy Institute. “Inflation remains low in the digital sector, even as it accelerates across much of the economy. Start with consumer inflation (as measured by the CPI). Over the past year, prices for digital consumer goods and services tracked by BLS (see graphic) have risen by only 1.9% overall, compared to 4.9% for CPI ex food/energy and 6.8% for total CPI.”

“Digital technology tends to counter inflation for a number of reasons,” writes CCIA’s Trevor Wagener. “First and most straightforwardly, digital goods and services tend to be less expensive than, and increase in price more slowly than, their offline counterparts.”

— “Second, because digital services, platforms, and marketplaces tend to facilitate price comparisons and transparency to consumers, increased use of digital tools by both consumers and producers tends to put downward pressure on prices by enhancing competition.”

— “Third, digital tools are often prerequisites for productivity enhancements, supply chain improvements, and cost reductions on the supply side that result in reduced prices for consumers.”