Price inflation at galaxus.de has averaged 1.4 per cent since Russia’s attack on Ukraine. But ever since May of this year, prices have been falling. True, sneakers, PC cases and uninterruptible power supplies have become more expensive. But products such as graphics cards and external hard drives have been an average of twelve per cent cheaper every month since January 2022 than in the same month the previous year. RAM by as much as 15 per cent!
How do you feel about the price development online and offline? Let us know in the comments!
Header image: The price parity tool at galaxus.co.uk shows the price history for each product - Image: Chris Walker
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Perceived inflation is 18 per cent in Germany, according to a study by credit insurer Allianz Trade. In truth, it was 6.4 per cent in June. It has fallen in the eurozone, yet it has risen again in Germany. Still, at least Office & Gaming, Consumer Electronics and Computing enjoyers get to be happy. Currently inflation is significantly lower in these product categories for the online department store Galaxus, and there are plenty of great deals to be found. The DIY, supermarket, home & living, baby & toys and major household appliances & kitchen sectors have risen in price. Inflation rates are highest for fashion & sports at 7.1 per cent and for small household appliances at 7.4 per cent.
The best bargains are currently found among memory and graphics cards. Inflation for graphics cards since July 2022 has averaged as much as minus 25 per cent. As of January 2022, it has averaged minus 12.3 per cent. But many products have also become more expensive over time. «Inflation happens in cycles,» says Hendrik Blenken Blijdenstein, chief commercial officer at Digitec Galaxus. «First production companies raise prices, after a delay the manufacturers and their suppliers follow suit – and in the end the pressure on margins forces retailers to do the same.» As a result of stronger competition and easy price comparison, this happens later in online retail than in stationary retail.
Smartphones have a different product life cycle than Legos and sneakers
In addition to product types such as network accessories, network switches or UPS, everyday items have also become more expensive. For example, clothing irons and filter coffee makers are in the top 10 with eight per cent average monthly inflation. Even Lego bricks and the like have become more expensive on galaxus.de. Good deals can currently be found among numerous technical products if you don’t necessarily always want the latest model. TVs, notebooks and webcams have become significantly cheaper on average.
«It should be noted that our analysis didn’t include the product life cycle,» says Bernhard Walser, Machine Learning Engineer at Digitec Galaxus. «This means we can’t currently include any successor models. That’s why we’re seeing deflation in smartphones, for example, as models get older over time and decrease in demand.» Nevertheless, the analysis is an interesting barometer for the development of sales prices at Galaxus and in online retail. However, the comparison with overall economic inflation should be treated with caution. «We don’t want to compare apples with oranges,» Bernhard said. And yet it is interesting that the inflation peaks in both Germany and galaxus.de were triggered simultaneously between September and November 2022. But while Galaxus prices have currently fallen, inflation in Germany has recently risen again. Experts suspect that one-off effects such as fuel discounts and 9-euro tickets in Germany prevented inflation last year, which is now leading to a delayed rise.
It’s also interesting to look across the pond: according to the Adobe Digital Price Index, online retail in the USA has recently become noticeably cheaper. In June, prices fell to a 36-month low of 2.6 per cent. Overall inflation in the U.S. was 3 per cent in June (the same month a year earlier: 9.1 per cent). Our colleague Alex Hämmerli last reported on the development in our Swiss stores.
