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What? US inflation is low because of smartphones?

New York - Innovation disrupting traditional business models of many industries, putting lid on prices and influencing inflation

Americans' love of their smartphones and apps may be contributing to the sluggish pace of inflation that is worrying Wall Street and the Federal Reserve, a top bond manager at BlackRock, the world's biggest asset manager, said.
Consumers are relying less and less on devices such as cameras, radios and televisions, and services such as taxis and stores, replacing them with programs in their iPhones and other high-end phones, according to Rick Rieder, BlackRock's chief investment officer of global fixed income.
Companies like Amazon.com, Netflix and Uber Technologies have enticed consumers with convenience and low prices through their phones. As a result, they have upended traditional retailers, entertainment outlets and transportation services, Rieder said in an article published.
"Technological innovation is disrupting traditional business models of many industries, putting a lid on prices and influencing inflation in the economy overall," he wrote.
The core rate of the consumer price index, the US government's broadest inflation gauge, increased 1.7 per cent year-on-year in May, the smallest such rise since May 2015, the Labour Department said last week.
On Monday, Chicago Federal Reserve President Charles Evans, when asked about Amazon's proposed $13.7 billion buyout of up-market grocer Whole Foods Market Inc at an event in New York, said new competitors with a technological edge entering in major industries pose possible long-term implications that inflation will remain low.
Some of the recent pullback in inflation also stemmed from lower energy prices resulting from global oversupply, analysts said. 
The recent softening of inflation has raised speculation on the timing on the US central bank's next rate increase. A few policymakers including Evans have said it may be worthwhile for the Fed to wait until year-end before considering another rate hike.
Philadelphia Fed President Patrick Harker told the Financial Times the Fed should defer its next hike until December.
In the meantime, this technological shift will likely persist, Rieder said, making it difficult for inflation to meet the Fed's 2 percent target, which policymakers deem optimal to support stable economic growth.
"This is an increasingly challenging paradigm to execute upon today in the more modern commerce era we live in," Rieder said. "We believe both investors and policymakers need to abandon an overly rigid view of price change."