In a positive sign for inflation-weary consumers, online prices fell in December as retailers turned to deep discounts to lure shoppers, according to a report from Adobe Analytics.
Adobe said e-commerce prices were 1.6% lower than a year earlier, marking the fourth consecutive month of annual price declines.
For many years, online prices did nothing but fall, as e-commerce was immune to inflationary pressures. That changed after the start of the Covid-19 pandemic, as strong demand and supply chain issues pushed up online prices.
Vivek Pandya, principal analyst at Adobe Digital Insights, told CNN that the return of falling prices is a big positive for consumers.
“When online prices started coming down over the summer, our thinking was that one month could be a fluke, but two months could be a trend,” Pandya said. “Now that we’re in a fourth straight month of online deflation, with price increases cooling even in non-promotional categories, it’s an encouraging sign for consumers worried about high inflation.”
The report comes as government statistics show inflation continues to cool. The Bureau of Labor Statistics is expected to say on Thursday that consumer prices rose 6.5% year-over-year in December, marking the sixth straight month of declining inflation.
Holiday promotions helped lower prices in December. Categories experiencing the biggest price drops include computers (-16.2% year-over-year), electronics (-12%), toys (-7.1%) and sporting goods (-5.9%), Adobe said .
“Retailers, holding excess inventory or facing a softer spending environment, adopted heavy discounting this year to boost volume,” Pandya said.
Prices continue to rise on products that don’t normally have deep discounts, such as personal care (+1.6%) and medical equipment (+4.1%).
Grocery prices rose 13.5% year-on-year in December, although this is the third consecutive month of reduced inflation in this category after it hit an all-time high of 14.3% in September.
Although online prices fell annually, Adobe said they rose 1.1% between November and December.
Pandya said this month-on-month increase was driven by the fact that many retailers offered record discounts in November around Black Friday and Cyber Monday, deals that were eventually rescinded.
“It would have been unusual for prices not to increase month-on-month,” he said.
When asked if online prices are returning to their normal pre-Covid trends, Pandya said prices in some categories such as groceries and clothing remain high, while others such as electronics, are experiencing constant price drops.
“We’re not out of the woods yet, but it’s trending in that direction,” he said.
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