Photographer: Kiyoshi Ota/Bloomberg

You Want the CPI? Or the DPI? What Consumer Prices Look Like Sliced Digitally

Surprises in Adobe's latest Digital Price Index.

Ever since Adobe Systems launched a digital alternative to the government's Consumer Price Index, interesting findings have been popping up.

The latest monthly version, released today, finds that sales of expensive televisions plunged in recent months while sales of expensive computers held up relatively well. Adobe also finds that prices of sporting goods plunged right around the time that Sports Authority and the smaller Sport Chalet chain were staging big going-out-of-business sales.

That's information you can't get from the Bureau of Labor Statistics' Consumer Price Index. The government doesn't measure sales volumes, so it can tell you how much a high-end TV costs but not how many of them were sold. Adobe collects sales volumes from its Adobe Marketing Cloud, which sellers of consumer products use to get insight into their customers.

The CPI also misses price changes, if they're limited to one seller, like Sports Authority, since the CPI gives equal weight to prices of all retailers no matter how much or little of something they sell. (Adobe won't confirm that Sports Authority is a customer, but the big drop in the index's measure of sporting goods prices after Sports Authority filed for bankruptcy court protection suggests it is.)

Adobe found that sales of TVs costing $2,000 or more fell 26 percent in the year through May 2016. Sales of TVs costing under $1,000 fell around 14 percent. The pattern was the opposite in computers. Sales fell 15 percent over the year for models under $300, and just 4 percent for computers costing over $1,600, according to Adobe's data.

The steep drop in sales of the expensive TVs may be because there haven't been many technological breakthroughs in the category lately, speculates Mickey Mericle, Adobe's vice president for marketing insights, analytics, and operations. The last one, she says, was 4K resolution, or ultra-high-definition screens. Sales of those sets surged in 2014 and 2015.

The Digital Price Index isn't perfect. Because it captures only online sales, it doesn't cover all of the goods and services in the CPI, such as housing and gasoline. And it's not seasonally adjusted, so it can be thrown off by things like airline tickets whose prices fluctuate throughout the year.

Still, it's a gold mine for economists and other analysts, as Stanford University economist Peter Klenow, a consultant to the company, noted in an interview.

"It’s pretty fun to be able to see the amazing data Adobe has," he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE