Press Contacts Melissa Chanslor Adobe 415-832-5489 [email protected] Stefan Offermann Adobe 408-536-4023 [email protected] FOR IMMEDIATE RELEASE Adobe Digital Price Index Reports Signs of Deflation in U.S. Economy Consumer Goods Pricing Data for April Shows Decline Across Electronics, Flights and Hotels, Groceries and Sporting Goods SAN JOSE, Calif., – May 18, 2016 – Inflation rates constantly fluctuate and are heavily dependent on the surge of online shopping. Yet traditional economic reporting fails to capture real-time price and quantity changes as well as actual consumer behavior, and is therefore unable to measure the impact of major market changes as quickly, such as recent bankruptcy announcements of retailers or Intel’s softness in the PC market. By contrast, Adobe’s (Nasdaq:ADBE) monthly Digital Price Index (DPI) measures prices and quantities of online purchases in real-time. Two economists – 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, and Pete Klenow, professor, department of economics at Stanford University – are collaborating with Adobe on the DPI. Adobe’s April report for consumer goods prices shows month-over-month (MoM) deflation between 0.2 and 2.4 percent for all categories Adobe is currently tracking with the exception of hotel prices, which increased by 1.6 percent. Between March 2015 and March 2016 prices for TVs, computers, flights, appliances, toys, furniture, bedding and sporting goods dropped between 2.2 and 19.8 percent. In comparison, the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) reported between 1.1 and 16.6 percent price deflation for the same categories and time period. For sporting goods, the DPI showed three times more deflation than the CPI between March 2015 and March 2016 (4.7 versus 1.3 percent). The drop in airfares (0.9 percent MoM; 4.6 percent between April 2015 and April 2016) reveals that savings from lower jet fuel costs are getting passed on to consumers. The DPI analyzes billions of digital transactions involving 15 billion website visits and 2.2 million products sold online, tracking digital transactions more accurately than any other current source. The CPI on the other hand, relies on consumer surveys to approximate the actual sales in each product category. The DPI uses transactional data on the actual quantities purchased for millions of products and captures the data in real-time. Seven dollars and fifty cents out of every ten dollars spent online with the top 500 U.S. retailers go through Adobe Marketing Cloud.* “With brands rapidly innovating and introducing new products and consumers increasingly shopping online, it’s essential that we have a mechanism to identify digital pricing trends quickly and accurately,” said Mickey Mericle, vice president, Marketing and Customer Insights at Adobe. “The monthly DPI is the only analysis of the U.S. economy that addresses this. Our third DPI report encompasses more categories, and by the end of 2016, we expect to cover 80 to 90 percent of the CPI, along with an overall inflation number.” DPI Categories The DPI added three new categories to its monthly analysis – sporting goods, flights and hotels. Latest findings include: • Sporting Goods: Prices for sporting goods in April decreased by 0.7 percent MoM. In March 2016, the DPI saw three times more deflation YoY than the CPI, down 4.7 percent versus 1.3 percent respectively. This is indicative of how deflation affects retail activity, including recent bankruptcy announcements from sporting goods retailers. DPI sporting goods data Page 2 of 3 Adobe Digital Price Index Reports Signs of Deflation in U.S. Economy is based on approximately 300,000 products. Products include small equipment and accessories, such as balls, gloves and uniforms, as well as large equipment, like treadmills and weightlifting tools. • Flights: For April, airfares decreased 0.9 percent MoM. In March 2016, the DPI showed deflation of 4.7 percent for flights YoY, more than three times more than the CPI’s reported deflation of 1.4 percent. Domestic cities that saw the most decrease in airfares include Phoenix, Dallas, Miami and Los Angeles. DPI airfare data is based on approximately 370,000 flight routes between March 2015 and April 2016. Prices include associated fees. • Hotels: In April, hotel prices increased 1.6 percent MoM. New York, Chicago, Boston, Seattle, and San Francisco, saw the most inflation, whereas Orlando, Miami, Fort Lauderdale and Tampa saw the most deflation. In March 2016, the DPI reported 2.9 percent inflation YoY compared to the CPI’s 1.1 percent. DPI hotel data is based on approximately 250,000 hotel properties and include associated fees. • Appliances: Prices for appliances in April decreased 1.1 percent MoM, with refrigerators and washing machines seeing the most deflation. In March 2016, the DPI saw prices for appliances drop 4.8 percent YoY compared to the CPI’s report of only 3.2 percent. DPI appliance data is based on online transactions of approximately 110,000 products. Products include large appliances such as refrigerators, ovens, washers and dryers, as well as small appliances such as vacuums, mixers and blenders. • Toys: In April, prices for toys decreased 1.6 percent MoM. Prices fell 5.3 percent between March 2015 and March 2016. The CPI reported higher deflation (7.7 percent) during the same period. DPI data is based on online transactions for approximately 249,000 toys, including toys, games and playground equipment. • Furniture and Bedding: The cost of furniture and bedding in April 2016 dropped 0.5 percent, with dining sets seeing the most deflation. Prices decreased 2.2 percent between March 2015 and 2016, twice as much deflation than the CPI’s report. DPI data is based on online transactions of approximately 173,000 products and include indoor and outdoor furniture, mattresses, sheets, pillows and other bedding products. • Electronics: In April, prices for electronics dropped one percent MoM, with computers, TVs and tablets seeing the most deflation. The CPI doesn’t break out electronics overall, but reported that prices fell 16.6 percent for TVs and 7.2 percent for computers in March YoY. In comparison, the DPI shows much more deflation (19.8 percent for TVs and 13.6 percent for computers). DPI data is based on online transactions of one million electronics products. • Groceries (“Food at Home”): Prices for groceries fell 0.2 percent in April, with meat, juices and non-alcoholic beverages seeing the most deflation. The March 2016 DPI showed inflation of 0.5 percent YoY. For the same period, the CPI reported 0.5 percent deflation. 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. Methodology Adobe is the first company to conduct a digital-centric analysis based on real-time access to price-paid data and actual quantities sold. Adobe Digital Index 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. No other organization can use the Fisher Ideal Price method today because the calculation requires knowing the quantity of each product purchased in each period. Before Adobe, this has been impossible to measure at a sufficient scale. Helpful Links • Adobe Digital Economy Project April Report • Blog post • Adobe Digital Index Portal on CMO.com About Adobe Adobe is changing the world through digital experiences. For more information, visit www.adobe.com. Page 3 of 3 Adobe Digital Price Index Reports Signs of Deflation in U.S. Economy *Source: Internet Retailer’s 2015 Top 500 eGuide ### © 2016 Adobe Systems Incorporated. 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.