COVID-19 Pandemic Has Devalued Online Dollar

(5 April 2021) In 2020, for the first time since Adobe began tracking digital purchasing power, US consumers were getting less for their online dollars than they had the previous year.

• The rise in consumer demand and online sales in the second half of 2020, stimulated by US government spending, easing of monetary policy, and pent-up demand from the early months of the pandemic, was met with supply chain disruptions and rising prices.
• The online dollar continued to weaken in the opening months of 2021. In February, online inflation was evident in 13 product categories out of 18 tracked by Adobe. In the same month a year ago, online prices were increasing for only five product categories.

While the Consumer Price Index (CPI) continues to stay well below the Federal Reserve's 2% target, the reverse in the long-term online pricing trend could be an early signal of accelerating inflation in the near future.