Looking at monthly discounts and other price changes over time gives us a more complete picture of infla- tion or deflation online, as we’ve been publishing in the ADI Digital Economy Project’s Digital Price Index (DPI). This quarter’s Digital Dollar report features a quarterly release of the Digital Price Index (DPI) and updates from the Digital Economy Project. As previous work from the Digital Economy Project has shown, online deflation and price declines as measured by the DPI have been faster online than in comparable cate- gories as measured by the Bureau of Labor Statistics Consumer Price Index (CPI). This pattern has continued into 2018 with deflation across all shared categories between the CPI and the DPI showing the DPI is -0.6 percentage points lower (-0.7% in the DPI vs -0.1% in the CPI) year-over-year through March. Academic research based on analysis of the Digital Price Index from economists Pete Klenow and Austan Goolsbee shows that prices for goods online as calculated in the DPI show faster deflation than comparable goods as measured in the CPI, which tracks almost exclusively in-store prices. Klenow says, “From 2014 to 2017, annual inflation was fully 1.3 percentage points lower online (in the DPI) than offline (in the CPI) for the same categories. The entry of new products and the exit of old products is rapid online, suggesting that true inflation online – incorporating the quality and variety of new goods – is even lower than matched-model inflation.” Find Klenow and Goolsbee’s presentation here. Find more charts and graphs from the Adobe Digital Price Index in the Appendix. A flat file of the data can be obtained here. DIGITAL DOLLAR: RETAIL AND ECONOMICS UPDATE 2018Q1