25 Straight Months
According to the Adobe (ADBE) Digital Price Index, online prices are finally cooling off. The welcome development comes after 25 consecutive months of year-over-year increases. Prices fell 1% in July compared to the same time period in 2021. Meanwhile, it marked the second straight month that prices fell on a monthly basis. Analysts argue this shows ecommerce is entering a period of deflation.
Adobe’s report showed decreasing prices in seven out of the 18 categories tracked in July. The price of books, clothing, computers, electronics, jewelry, and sporting goods all fell year-over-year. The most significant decline was for electronics, as July’s prices were down 9.3% from the previous year.
Positive Indicators
Along both Wall Street and Main Street, people are looking for signs inflation is easing. Adobe’s findings concerning online prices are certainly a positive sign. But market veterans caution it will take a significant amount of time before price increases start approaching “normal” levels in terms of inflation.
For example, June’s CPI checked in at 9.1% year-over-year. The Fed is hiking rates and effectively raising the cost of borrowing, which has a chilling effect on demand. Even still, if the CPI declines in the coming months, it’s likely to be incremental. From the perspective of the central bank, inflation around 2% is acceptable.
What’s Behind the Decline?
The reason online prices are falling is two-fold. One factor is oversupply, as retailers like Target (TGT), Walmart (WMT), and Best Buy (BBY) have disclosed they’re holding on to excess inventory. Sitting on stale products is bad for their bottom line, so firms cut prices to get items sold.
The other factor is that consumer confidence has fallen, leading to a pullback in spending. That diminished demand also motivates retailers to cut prices in a bid to move items. It’s also worth noting that online grocery prices aren’t slowing down — in fact it’s quite the opposite. The category’s prices rose 13.4% year-over-year in July to set a new record. Consumers will want to buckle up and be patient as ecommerce prices begin to decline — filling up your cart and hitting refresh every few minutes will only net frustration.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22081002
The post Online Prices Are Finally Falling Amid Oversupply and Diminished Consumer Confidence appeared first on SoFi.
from SoFi Blog – SoFi https://ift.tt/XxBFcqJ
via IFTTT
0 Comments