How much is that television on the shopping website? Probably quite a bit less than it was last year, or even a month ago.

Notably, inflation is a major topic, in the news and in people’s daily lives. But according to a recent Adobe Digital Price Index report, online prices are actually going down for the first time in two years. The report even uses the term “deflation” to describe the current e-commerce environment.

The specific amount of thus deflation varies by category. For example, Adobe Analytics indicates that prices for electronics—the product category that accounts for the biggest share of online spending, at 18.6 percent—fell 9.3 percent from the previous year, and 2 percent in the most recent month. After 14 months of clothing prices going up, they are coming down too. As of July 2022, clothing prices dropped 1 percent year over year and 6.3 month over month.

Toys are practically being given away, with prices falling 8.2 percent year over year, and 2.9 from the previous month. In total, prices for electronics, jewelry, books, toys, computers, sporting goods, and apparel all decreased year over year. Month over month, electronics, personal care products, office supplies, jewelry, books, furniture/bedding, toys, home/garden, appliances, flowers/related gifts, computers, sporting goods, medical equipment/supplies, and apparel saw price drops.

Consumers in these product categories will need to have saved some of the extra cash they kept though, because online food prices are up 13.4 percent over the previous year, and 1.4 percent over the previous month—the largest increase of any category. But the increases in prices for pet products purchased online are not far behind, jumping 12.6 percent year over year, 1.7 percent month over month. Prices for pet products have been rising for 27 months, creating serious challenges for pet owners who are determined their furry companions deserve the best.

These dynamic shifts in prices suggest both difficulties and opportunities for both e-commerce retailers and consumers. Savvy buyers might able to score some great deals in certain categories and thus leave more of their budgets for those products that continue to increase in price. Retailers could devote more attention to their strategic pricing, to ensure they lower prices enough to attract consumers but not so much that they eliminate their profit margins.

Discussion Questions:

1. Why would prices fall in some categories, like electronics and clothing, but not in others, such as food or pet supplies?
2. Is now a good time for consumers to look for bargains?
3. If you were an electronics retailer, how would you entice consumers to start spending on televisions right now?

Source: Matt Egan, “Good Inflation News: Online Shopping Prices Are Suddenly Falling Fast,” CNN Business, August 9, 2022; “Adobe Digital Price Index: E-commerce Enters Deflation for the First Time in over Two Years,” news.adobe.com, August 9, 2022