Ecommerce inflation could be “permanent” as online prices increase for first time in years

Online retail prices jumped 2.3 per cent in June marking a sharp reversal of years of consistent deflation which is expected to continue.

According to new figures from Adobe, between 2015 and 2019 ecommerce prices fell 3.9 per cent on average every year, with many a number of years seeing declines of five per cent.

In fact, in the five years following 2014 shoppers were getting 25 centre more for every dollar spent online every year.

This longstanding period of deflation has been brought to an abrupt halt by the pandemic, seeing supply chain issues, product shortages and skyrocketing demand boost online prices for the first time in years.

By category, appliances jumped 2.3 per cent year-on-year in June, after falling 2.6 per cent annually between 2015 and 2019.

Online apparel saw the biggest increase however, skyrocketing 16.2 per cent reversing average annual declines of one per cent pre-pandemic.

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Adobe, which collected spending data from over 1 trillion visits to ecommerce sites, believes this inflation is here to stay.

“As retailers find demand and they are against (supply chain) shortages, they are pricing at higher levels,” Adobe Digital Insight’s lead analyst for Vivek Pandya said.

“And in some instances consumers will reckon with that and say they are getting convenience and will continue to absorb the cost,”

Former economic adviser to President Obama Austan Goolsbee added: “The categories that people spent money on during the pandemic were really fundamentally different from what they were before the pandemic.

“I think a lot of those changes are going to be permanent or at least partly permanent.”

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