Jul 30, 2021 - Economy

Inflation hits online shopping

Price changes for select online categories
Data: Adobe Digital Economy Index; Chart: Connor Rothschild/Axios

The deals you’re getting online may not be as good as what you were getting a year ago.

Why it matters: Shoppers have long understood that it’s cheaper to buy goods online than in brick-and-mortar stores.

  • Up until 2019, the prices for goods online had actually been falling for years.

By the numbers: Adobe Analytics analyzed the online purchasing data of more than 1 trillion visits to U.S. retail websites.

  • Online prices declined steadily from 2015 to 2019, falling 3.9% per year on average.
  • However, online prices in June increased by 2.3% from a year ago.
  • While the number is up, it’s still lower than the historic 5.4% jump in the U.S. Consumer Price Index during the same period.
  • Leading the online price gains were apparel, which was up 16.2%, and nonprescription drugs, which were up 4%.
  • Though, online computer prices fell 9.6%, and online toy prices declined by 4.2%.

State of play: Shorter-term measures suggest prices remain on an upward trajectory. Online prices were up 1.2% month-over-month. This compares to CPI, which was up 0.9% during the period.

The big picture: Behind all of the inflation figures — both online and offline — are shortages that are plaguing almost every industry as the reopened economy has come with demand far outstripping supply.

The bottom line: Companies will continue to try to steal customers from each other by offering lower prices, and they’ll aim to do it profitably by cutting costs and making their operations more streamlined. But there’s not much they can do with pricing when margins are already thin and costs are rising.

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