Speaking exclusively to Genting, he said: “Everything that Newcastle do now is inflated by 25%, 30%, because they've got all this money to spend.
“This happened at Everton, before I got there, Farhad [Moshiri] came in and all of a sudden a player that was 20 million was 30 million, the 30 [million player] was 40, 45 million.
“Forty-five was then 55 or 60 million, because that club has now got all this money.
“Inflation will be higher than ever for them now. They’ll be paying players more than they've ever paid in the history of the club – one, for the quality of the player and, two, the fact that they've got to pay that money because everybody's talked about their wealth.
“The player will want that little bit more, because that foreign player might not have particularly wanted to go to the Premier League, but would have preferred it in London, and then Manchester, but ends up in Newcastle.
“[He would then] thoroughly enjoy himself up there, because the fans are fanatic. The location can make it a little bit more difficult to secure a player [though].”
Allardyce also feels that players’ agents leak information to the press, in order to generate increased interest in their clients — which drives prices up even further.
The veteran manager explained that, in the modern age of social media, keeping transfer information secret is far more difficult than it used to be.
“I think one of the things an agent does – which is part of his job – is if you show any interest, it goes in the paper,” he continued. “And he swears blindly he’s not done it, but generally, he has.
“Because what he's trying to do is create – particularly in the January window – an auction to do the best for his player.
“It's a merry-go-round at that stage, you have to be very quick. If you've got a player in the building, then you’ll want to keep him in the building.
“And if they start saying, ‘Well, we'll think about it, we'll go away,’ then nine times out of 10, he’s gone somewhere else.
“What happens is, people at other clubs haven't realised that the player is available and they like him, so they get onto the agent and say, ‘we like your player, come to us’ – and if that club is bigger and better than yours, then you ultimately lose him.
“Every manager is trying to keep transfers as much cloak and dagger as you can, but it's massively difficult. Massively.
“I mean, some daft player might tweet or might post, ‘I saw X at our club today’, like a fool. Trying to keep it quiet now like you used to be able to, and then announce it, is nearly impossible.
“But you have to do your business very quickly, otherwise the vultures can swoop in and come down and pinch him off you.
“That’s why you're on tenterhooks until they actually sign – until they’ve got the medical done and signed that piece of paper.”