Deflation comes for e-commerce: Online prices falling
Deflation — a concept that’s been gathering metaphorical dust of late — has come for e-commerce.
By the numbers: Online prices declined by 1% in July, compared with a year earlier, according to the Adobe Digital Price Index released Tuesday. It marks the first price decline in the index in 25 months — and it’s the fifth straight month in which the index has fallen.
Zoom in: Online prices in consumer electronics plunged 9.3% year over year and 2% month-over-month in July, fueling much of the decrease.
- Toy prices were down 8.2% over the previous 12 months, while apparel prices slid 1%.
Quick take: The downward trend in online prices suggests that retailers are getting more desperate to dump excess inventory built up from the pandemic, now that consumers shifted more spending to services.
Context: It could also be looked at as a return to normalcy.
- Online prices had typical been falling in the years leading up to the pandemic.
- 15 of 18 categories tracked by Adobe experienced average online price declines from 2015 to 2019, led by computers (-9.2%), electronics (-9.1%), toys (-5.5%) and home and garden (-5.4%).
- By contrast, only groceries, prescription drugs and flowers saw average annual increases over that time period, and those were no more than +0.5%.
Yes, but: Grocery prices soared 13.4% in July compared with a year earlier and increased 1.4% over the previous month.
What we're watching: The monthly Consumer Price Index to be released Wednesday will give us a sense for whether overall inflation has finally peaked.