Adobe Report Shows Continued Deflation in U.S. Economy
July 14 2016 - 7:00AM
Business Wire
UK Travel Costs Impacted by Brexit; Prices for Groceries and
Other Essential Goods Decreased Less than Non-Essential
Goods
Adobe (NASDAQ:ADBE) today announced the release of its fifth
monthly Digital Price Index (DPI) for June, which reveals the
impact of Brexit on UK travel prices and incorporates data for
over-the-counter (non-prescription) drugs and medical equipment and
supplies for the first time. Prices for London flights and hotels
decreased significantly unlike other comparable destinations while
prices for over-the-counter drugs increased slightly
month-over-month (MoM). By leveraging big data, the DPI offers more
accuracy and granularity in measuring U.S. inflation, filling a
hole that existing economic reporting is unable to capture.
Through the analysis of 15 billion website visits and online
transactions for over 2.2 million different products, Adobe’s June
report shows continued deflation in the vast majority of goods and
services the DPI tracks, with essential goods such as groceries and
medical supplies seeing significantly less deflation than
non-essential goods such as electronics and sporting goods.
Tablets, televisions and appliances drove the most deflation from
May to June with up to 3.5 percent, while over-the-counter drugs,
international airfares and toys saw the highest inflation rates
with up to 2.5 percent. Prices for over-the-counter drugs increased
0.5 percent MoM, while prices for medical equipment and supplies
decreased 0.2 percent. In addition, June’s data reveals that 16
percent of the month’s online spend for groceries was on new
products while electronics saw an average of 80 percent of online
spend on new products.
“While international airfares were one of the few categories
that saw prices increase between May and June, prices for London
flights and hotels specifically decreased significantly with 8.5
and 3.0 percent respectively,” said Mickey Mericle, vice president,
Marketing and Customer Insights at Adobe. “In addition to lower
fuel costs, the recent devaluation of the British Pound appears to
be a contributing factor to lower travel costs to the UK.” The
DPI’s travel prices are in dollars.
By tracking $7.50 out of every $10 spent online with the top 500
U.S. retailers,* the DPI is able to analyze billions of digital
transactions. Adobe is the first company to conduct a
digital-centric analysis based on real-time access to price-paid
data and actual quantities sold. Unlike other models, Adobe Digital
Insights leverages the Fisher Ideal Price method, which uses actual
quantities purchased to measure inflation and is recognized by
leading economists as the gold standard for the calculation of
inflation. In contrast, the Bureau of Labor Statistics’ Consumer
Price Index (CPI) relies on consumer surveys to approximate the
actual sales in each product category tracking only 87,000
products.
“The great precision of the DPI in measuring inflation can be
seen in the fact that its standard errors are, on average,
one-third of those in the CPI,” said Pete Klenow, professor,
department of economics at Stanford University. “Big data will
continue to play a critical role in the development and analysis of
economic reporting, and Adobe’s access to billions of digital
transactions clearly sets itself apart.”
“Adobe’s data shows that essential items have been seeing less
deflation than non-essentials,” said Austan Goolsbee, professor of
economics at The University of Chicago's Booth School of Business
and former chairman of the Council of Economic Advisers for
President Obama. “Depending on the causes, this can lead to a
greater share of consumers’ budgets going to essentials or to
significant changes in consumer demand patterns. We will need to
pay close attention to how manufacturers respond to consumer
demand.”
Latest findings include:
- Flights: For June, domestic
airfares increased 0.4 percent Month-over-Month (MoM), with flights
to and from Florida seeing the largest increase and Washington,
Tennessee and Oregon driving price decreases. Prices for
international airfares are up 2.5 percent MoM overall while prices
for flights to London specifically are down 8.5 percent MoM, 12.1
percent YoY. Data is based on about 370 flight routes.
- Hotels: Domestic hotel prices
rose 0.8 percent Year-over-Year (YoY), with Nevada, Tennessee,
Colorado and California destinations driving these increases. While
the DPI showed 0.7 percent inflation in May, the CPI showed a 3.5
percent inflation rate. Specific to London, prices for hotels
decreased 3.0 percent MoM. DPI hotel data is based on approximately
250,000 hotel properties and include associated fees.
- Over-the-Counter Drugs: Prices
for over-the-counter drugs increased slightly by 0.3 percent YoY,
with primary inflation occurring for over-the-counter drugs priced
between $10 and $15. In May, the DPI showed 0.8 percent deflation
for over-the-counter drugs, while the CPI showed 0.3% inflation
MoM. DPI over-the-counter drug data is based on transactions of
16,000 products.
- Medical Equipment and Supplies:
For June, prices for medical equipment and supplies, such as
supportive and convalescent equipment, dressings and first aid
kits, dropped 0.6 percent YoY. Products priced more than $135 drove
this deflation, while the majority of price increases were seen in
products between $0 and $10. Diabetes-specific supplies and
equipment saw the largest price increase YoY, with an inflation
rate of 2.4 percent. For May, the DPI saw deflation (1.3 percent)
while the CPI reported inflation at 0.7 percent. Data is based on
transactions of 6,000 products.
- Sporting Goods: While June
sporting goods prices decreased 0.6 percent MoM, the DPI shows 5.1
percent deflation YoY with products priced between $40 and $100
driving the YoY downward trend. For the same time period in May,
the DPI reported vastly different data than the CPI: 5.2 percent
deflation vs. 0.3 percent inflation, respectively. Data is based on
approximately 300,000 products.
- Electronics: The DPI shows that
prices for electronics decreased 10.5 percent YoY (1.8 percent
MoM), with products priced between $200 and $500 seeing the largest
declines. Specific to computers, the DPI shows 12.3 percent YoY
deflation in June with products priced between $700 and $1200
seeing the largest decrease. Prices for televisions and tablets are
also down significantly YoY, with deflation at 17.5 and 19.9
percent, respectively. While the CPI does not break out electronics
overall, the latest report showed prices fell 2.9 percent YoY for
appliances and 7.8 percent for computers in May. For the same
period, the DPI saw significantly more deflation with 4.5 percent
for appliances and 12.7 percent for computers. DPI data is based on
online transactions of over one million electronics products.
- Groceries: Following four months
of price drops, the DPI showed slight deflation of 0.1 percent YoY
and 0.6 percent deflation MoM. The DPI covers 30 to 40 percent of
online grocery transactions for approximately 195,000 products, and
is heavily comprised of groceries purchased online and picked up
in-store.
The Adobe Digital Economy Project June report can be found
here.
About Adobe
Adobe is changing the world through digital experiences. For
more information, visit www.adobe.com.
*Source: Internet Retailer’s 2015 Top 500 eGuide
© 2016 Adobe. All rights reserved. Adobe and the Adobe logo are
either registered trademarks or trademarks of Adobe Systems
Incorporated in the United States and/or other countries. All other
trademarks are the property of their respective owners.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160714005357/en/
AdobeAshley Levine, 415-832-4161aslevine@adobe.comStefan
Offermann, 408-536-4023sofferma@adobe.com
Adobe (NASDAQ:ADBE)
Historical Stock Chart
From Mar 2024 to Apr 2024
Adobe (NASDAQ:ADBE)
Historical Stock Chart
From Apr 2023 to Apr 2024