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Why Adobe Says It’s Cheaper to Shop Online

Amazon.com Illustrations Ahead Of Earnings FiguresAmazon.com Illustrations Ahead Of Earnings Figures

Convenience has been the primary reason for those who prefer shopping online to visiting brick-and-mortar stores. Now, add cheaper prices to the cart.

According to Adobe’s newly-conceived Digital Price Index, which tracked the movement of around 1.7 million online transactions, the prices of a range of items on the Web have fallen in comparison to the Consumer Price Index, the traditional measure of the price change for a basket of goods. The CPI usually follows fewer goods online, reported the New York Times, and also checks for price fluctuations based on periodic store visits.

Adobe’s new index focuses solely on online purchases, and its data indicates there’s a deflation of prices happening online, especially among electronics. The online prices of computers, for example, fell by a cumulative 12.8% from February 2015 to February 2016, said Adobe. In the same period, the CPI’s data reported a drop of 7.8%.

The drop in television prices are even more marked: between February 2015 and February 2016, Adobe’s DPI shows cumulative deflation of 20.3%, compared with a 15% drop according to the CPI. For appliances such as fridges, ovens and vacuums, online prices dropped 5.7% over the same period, compared with a 2.7% decline in the CPI.

A deeper look into dropping prices online could also help give insight as to why the current inflation rate has been hovering at 1%, and cannot find its way upwards. Austan Goolsbee, a former chairman of President Obama’s Council of Economic Advisers, and who helped Adobe develop its index, went as far as saying that the CPI could be underestimating deflation.

“Large parts of the economy, a fast-growing part, is now e-commerce-oriented,” Goolsbee told the Times. “And Amazon’s prices are much cheaper, and if everybody’s doing their shopping on Amazon (AMZN), then that should properly be taken into account in the inflation rate in a way it isn’t now.” It should be noted, however, that e-commerce retail sales last year accounted for 7.3% of total sales, according to the U.S. Census Bureau.