If you have seen the blockbuster movie “Terminator,” you might consider robots as human-destroying creatures; however, the reality is different. Robots today are known for beating inflation. Good news, right? And surprising too.
Well, consider the example of Amazon – an online shopping platform that offers the best price products with the help of its smart order taking system. In the retail market, Amazon is the translator as this internet giant uses robots for pick and pack processes, which speed up the delivery process. If you ever visit Amazon’s shipping center in Washington, you will see robotic arms lifting pallets of good inside there.
Amazon, with the use of robots, has changed the retail market and kept retailers from jacking up prices. Not only Amazon, but other grocery chains have adopted automation to speed up delivery in a highly competitive industry. Through the use of automatic processes, these companies are able to lower labor costs, which automatically brings down the inflation rate. It is the adoption of smart robots that is driving down labor costs relentlessly.
This is the reason that many other companies (both big and small) are investing in “smart” robots that can handle repetitive tasks to cut the prices. The use of smart robots reduces expenses while helping companies to maintain profits even in an intensively competitive global economy. Having witnessed that, a lot of people are talking about the contributions of AI (Artificial Intelligence) and robots in beating inflation.
According to the article “2021: A Price Oddity” of Sal Guatieri - senior economist and director of research of BMO Capital Markets in Toronto, we are expecting to see an increase in automation that has the potential to reduce costs than in the past.” He also contended that it is because of the automation that despite increasing wages and prices of products are controlled. In fact, since 2009, inflation has run at 2% or less using the Federal Reserve’s preferred core PCE price gauge that strips out volatile food and energy costs. It is the lowest inflation rate that is keeping the Fed from increasing the cost of borrowing. This, in turn, has caused a change in the U.
- stock market, with the S&P 500 SPX, -0.71% up 300% from the 2009 bear market low.
Guatieri threw light on the scenario by saying “When even the Fed chair questions the need to lift interest rates further, despite the lowest jobless rate in nearly half a century, you know something odd is happening with inflation,” It is not only Guatieri who believes so. Rather, there are other economists too who have agreed that automation has a stifling effect on inflation. According to Guatieri, this dampening impact runs deeper. In an interview with MarketWatch, Guatetieri shared the fact that the use of automation, especially the robots, is still relatively limited compared to the number of people employed. This is also evident from the stats that we have one robot per 100 human workers. But that’s just the beginning.
According to the report of the International Federation of Robotics - IFR, “Sales of industrial robots worldwide rose 30% in 2017 to 381,000 units,” and this number is expected to increase drastically. Here it is worth considering the example of South Korea – the world leader in robotics – where the ration of robots per human worker has already reached 7:100. Commenting on the situation, Guatieri said, “It’s getting to the point now that some studies suggest automation will replace almost half of all tasks that workers now do,” In the article, Guatieri also talked about Artificial Intelligence by commenting that it is not usual to see the use of AI, but soon it will spread to most of the economy.
This is because of the robot manufacturing companies that are developing collaborative smart robots. He also suspected that the deflationary effect of robotics is only going to become more pronounced. So, all in all, the robots equipped with Artificial Intelligence (AI) are the tools to bring down the inflation rate. Retail is not the only industry where robots are automation are in trend. Rather these have made their way to health care, education, restaurants, hotels, construction and other people-intensive businesses.