Prices on the internet drop by the largest margin in the past three years.

In August, online shoppers experienced a significant decline in prices, which is seen as a positive indicator in the battle against inflation.

According to Adobe Analytics, e-commerce prices decreased by 3.2% year over year in August, marking the most substantial annual decrease in over three years, or precisely 40 months.

This data reinforces the notion that inflation is moderating throughout the US economy, returning to more typical levels after the central bank’s aggressive interest rate hikes.

The release of the Consumer Price Index, a more closely monitored government report on consumer inflation for August, is scheduled for tomorrow.

Online shopping used to be characterized by falling prices for many years. However, this changed shortly after the onset of the pandemic due to disrupted supply chains, leading to the most significant inflation surge in four decades, even affecting online prices. Nevertheless, Adobe now reports that online prices have been consistently declining on an annual basis for a full year.

From July to August, there was a monthly price increase of 0.4%. Adobe attributed this rise to the substantial discounts offered during Amazon Prime Day in July.

Looking at the annual perspective, online prices experienced declines in most categories, with significant drops seen in sporting goods (-7%), appliances (-7.3%), electronics (-11.6%), and computers (-14.2%), as indicated in the report.

In contrast, grocery prices continued to rise on an annual basis, increasing by 5% in August. However, Adobe noted that this marks the 11th consecutive month of slowing price increases in the grocery sector. Furthermore, prices decreased by 0.2% from July to August, marking the first monthly decline in 27 months.

It’s important to note that while online prices are decreasing, prices in other sectors, which are more prominently visible, continue to rise rapidly.

Notably, gasoline prices have seen a substantial increase over the past two months. According to AAA, the national average for regular gas reached $3.84 per gallon on Tuesday, marking a 12-cent increase compared to the same time last year.

This surge in gas prices suggests that overall inflation probably moved in an undesirable direction in August, with economists predicting that headline inflation picked up pace during the same month.

However, core inflation, which excludes the fluctuating prices of food and energy, is expected to have moderated in August.