Heavy discounting saw prices for computers, toys and sporting goods fall sharply in November . 

For years, the World Wide Web provided a steady dose of disinflation, pushing prices for a variety of goods downward as consumers were exposed to a broader array of purchasing options.

Then came the coronavirus pandemic, and consumers – locked in their homes – found themselves competing for scarce products online with prices rising in tow. 

That is now reversing with online digital firm Adobe finding in November that online prices fell 3.2% from October and are down 1.99% from a year ago. It is the largest year-over-year decline in 31 months and the third consecutive monthly drop.

Even where prices have been rising the most, for online groceries and pet products, the pace of increases has slowed, to 0.3% and 0.2%, respectively.

The news augurs well for overall inflation and is in line with other reports that have seen prices soften for items as varied as houses, used cars and durable goods like furniture.

Adobe credited heavy discounting during the period known as Cyber Week – from before Thanksgiving though Black Friday and Cyber Monday – for the drop, as prices for computers fell 18% from a year ago, toys were down 7.7% and sporting goods were off by 5.7%. 

While the November drop in online prices was driven by major discounting on days including Cyber Monday and Black Friday, we also see signs of overall e-commerce inflation colling,” said Patrick Brown, vice president of growth marketing and insights at Adobe. “In categories such as groceries and personal care, which are not promotional in nature, we are seeing price increases come down from their heights in late summer and early Fall.” 

Inflation is a key focus of the Federal Reserve with a meeting of its monetary policymaking committee next week to consider a hike in interest rates. After four consecutive 75-basis-point interest rate increases, analysts expect the Fed to raise rates by 50 basis points. Already, the Fed’s moves have cooled off the housing sector and slowed the economy somewhat. 

Inflation, meanwhile, has slowed down, with the consumer price index down to 7.7% from an annual level above 9% in June. The price of oil has fallen by a third since mid-summer. But other prices have held up – especially groceries. 

Still, the Fed is walking a tightrope between slowing inflation and steering the economy into a recession, an outcome that many economists believe is unavoidable. 

A shallow recession much like the one we saw in the first and second quarters of 2022 is more likely,” economists at Commonwealth Financial Network wrote in a 2023 outlook on Monday. “Labor market fundamentals are expected to remain sound, and inflation is likely to roll over. So, the damage should be limited in severity and duration. The stage will be set for the Fed to declare victory over inflation and stop tightening monetary policy. And that should enable future growth.”