Inflation hits e-commerce after years of lower online prices

After years of falling prices online, Americans are beginning to pay more to shop online, new data released Thursday by Adobe shows.

Online prices rose 2.3 percent in June from a year earlier, according to the data, and 0.6 percent from May.

That’s a slower rise in prices than the 5.4 percent year-over-year spike clocked by the Labor Department’s consumer price index, which largely ignores online prices.

But Adobe says it’s a reversal of a years-long trend in e-commerce, which has seen prices fall every year since Adobe began tracking its so-called digital price index in 2014.

From 2015 to 2019, online prices tracked by Adobe fell by 3.9 percent, on average, each year.

“The COVID-19 pandemic created a massive expansion in the digital economy, with June 2021 figures showing $73.4 billion in online spend and growing 76.7 percent over a pre-pandemic period,” Taylor Schreiner, director of Adobe Digital Insights, said.

“Rising online prices, sustained over the first 6 months of 2021, chips away at a once-reliable boost to consumer purchasing power just as prices in the physical world creep up,” he added.

Online inflation.
E-commerce has seen prices fall every year since Adobe began tracking its so-called digital price index in 2014.
Adobe

Broken down by category, online apparel prices have risen the most over the past year, up over 16 percent, according to the data, and almost 5 percent just from May to June.

Sporting goods, appliances, nonprescription drugs and books were all up at least 2 percent year-over-year, Adobe said.

And categories in which prices continued to drop, including electronics and home goods, declined at a slower rate than they did historically.

Digital price index
Online apparel rises have risen the most over the past year, up over 16 percent.
Will Feuer

Austan Goolsbee, who helped establish the digital price index and previously served as chair of the council of economic advisers under the Obama administration, said some of the price increases may be long lasting.

“The categories that people spent money on during the pandemic were really fundamentally different from what they were before the pandemic,” he said in a statement. “I think a lot of those changes are going to be permanent or at least partly permanent.”