Online prices plunge by the most in three years

Online shoppers were greeted by rapidly falling prices in August, marking another positive sign in the fight against inflation.

E-commerce prices tumbled by 3.2% year over year in August, Adobe Analytics said on Tuesday. That’s the biggest annual drop in 40 months, or just over three years.

The data provides further evidence that inflation is cooling across the US economy, moving back towards normal levels following aggressive interest rate hikes from the central bank.

For years, online shopping was the land of falling prices. That changed shortly after the pandemic began, scrambling supply chains and setting off the worst burst of inflation in four decades. Even online prices started to rise rapidly.

But now, Adobe says annual online prices have been dropping for a full year.

On a monthly basis, prices increased by 0.4% between July and August. Adobe said this was a reflection of the deep discounting that occurred around Amazon Prime Day in July.

Online prices fell in most categories on an annual basis, including sharp drops for sporting goods (-7%), appliances (-7.3%), electronics (-11.6%) and computers (-14.2%), according to the report.

Groceries prices continue to rise on an annual rate, increasing by 5% in August, but Adobe said that marks the 11th straight month of cooling price gains for that area. Prices dipped 0.2% between July and August, marking the first monthly drop in 27 months.

Of course, while prices are falling online, they’re still rising rapidly in other, highly visible areas.

Most notably, gasoline prices have increased significantly over the past two months. The national average for regular gas hit $3.84 a gallon on Tuesday, up by 12 cents from this point last year, according to AAA.

The jump in gas prices means overall inflation likely moved in the wrong direction in August, with economists projecting that headline inflation accelerated last month.

Core inflation, which excludes volatile food and energy prices, is estimated to have cooled in August.

Oil prices hit 10-month high

Global oil prices climbed above $92 a barrel on Tuesday for the first time in nearly 10 months, reports my colleague Matt Egan. The climb came as the energy market feared for supply disruptions caused by catastrophic flooding in Libya.

Brent crude, the world benchmark, jumped nearly 2% to an intraday high of $92.38 a barrel. That’s the highest price since November 17, 2022. US oil prices popped 2.3% to as much as $89.29 a barrel, also the highest level since November.

The latest rally for oil prices will continue to push up prices at the pump for consumers and add to inflation across the US economy.

Analysts blamed the price surge on the deadly flooding in Libya, which will temporarily disrupt oil exports from that OPEC nation. It produced about 1 million barrels of oil per day in August, according to OPEC.

“Libya has a number of ports that are not able to export,” said Matt Smith, lead oil analyst for the Americas at Kpler. “It’s one more thing adding to the bullish side of the ledger for crude.”

The Libyan flooding comes just a week after Russia and Saudi Arabia sent oil prices climbing by announcing plans to extend their aggressive supply cuts.

Gasoline prices, which lag oil prices, have edged higher this week as a result of that announcement.

The national average for regular gasoline hit $3.84 a gallon on Tuesday, up from $3.81 a week ago, according to AAA. Gas prices are now 12 cents higher than at the same point last year.

Source: CNN