New York August 10 2022: Online prices in the US declined from a year earlier in July for the first time since 2020, as pandemic-era demand for consumer goods cools off.
Prices dropped by 1% on an annual basis, according to the Adobe Digital Price Index, ending a run of 25 straight months of inflation in goods purchased online. Before the pandemic, online prices had been falling steadily for several years.
“Wavering consumer confidence and a pullback in spending, coupled with oversupply for some retailers, is driving prices down in major online categories like electronics and apparel,” said Patrick Brown, vice president of growth marketing and insights at Adobe. “It provides a bit of relief for consumers.”
The pandemic led to a surge in online purchases of consumer goods that drove prices higher, as lockdowns restricted access to services like gyms or restaurant meals, and supply chains struggled to cope with the extra demand. While that boom may be cooling, the Federal Reserve is now concerned that inflation has spread from goods into services.
Roughly 15% of retail spending in the US is via e-commerce, a share that’s risen since the arrival of Covid-19. Consumers spent $73.7 billion online last month, Adobe said.
The largest price drops in July were in the prices of electronic goods, which fell 9.3% from a year earlier, according to Adobe. Toy prices fell 8.2% and clothing by 1%.
Less encouraging for consumers was the acceleration in online food inflation, with prices rising a record 13.4% from from a year earlier, the largest increase in any category.
The Adobe data is based on 1 trillion visits to retail sites and more than 100 million products across 18 categories.