As inflation continues to soar in the US and across the globe, commentators are looking toward Amazon Prime Day as a barometer of consumer behavior and purchasing patterns may be changing in the US. Food, fuel and energy prices all continued to climb in the US through June, with inflation reaching 9.1%, the highest in 40 years. As a result, consumer sentiment is the lowest it has been since the financial crisis back in 2008. With prices soaring, it will be important for businesses to understand how consumer demand is changing, including for consumer electronics. If demand for devices drops, it could affect the bottom line of retailers, OEMs and component players.

The story of the past two years has been that supply has struggled to keep up with demand due to supply chain kinks related to COVID-19 outbreaks and consequent shutdowns in manufacturing. But this appears to be shifting, with inflation-related declines in demand resulting in swelling inventories. Strong discounts on certain items for Prime Day may suggest high inventories that Amazon is trying to pare down. The consumer electronics segment had steep discounts across a range of devices, suggesting that consumers may be slowing down their spending on tech and need extra incentives to purchase. Indeed, so far in 2022, smartphone sales at Amazon have been below their 2021 levels.

Android smartphone discounts included some of the steepest price cuts on devices like the Samsung Galaxy S22 series, Samsung Galaxy Z Flip and Fold 3 5G, and Google Pixel 6 and 6 Pro. The Galaxy S22 Ultra was available for up to $420 off and the Galaxy Z Fold 3 5G for up to $700 off. There were also significant discounts of 21-43% on Motorola devices like the Motorola Moto G Pure, Moto G Power 2022 and the Motorola Edge 2021, as well as Tracfone devices. These are the steepest discounts we have seen yet in 2022 and that may be a signal that strong promotions are needed to move inventory and attract demand.

Similarly, strong promotions were seen for televisions. There are already reports that demand for big box items like TVs has declined across retailers like Target, Walmart and Best Buy as customers hold off on upgrading to the latest and greatest. As TVs pile up in warehouses, we are starting to see steep discounts of up to 45%. Amazon offered its lineup of Fire TVs for 45% off with similar discounts available for other TV brands.

Smartwatches saw strong discounts, including up to $110 off on the Apple Watch Series 7, $60 off on the Apple Watch SE and up to $120 off on Fitbit smartwatches. Other tech discounts included up to $120 off on Jabra TWS earbuds and up to $120 off on Samsung headphones. Amazon products were on steep discounts, with Amazon Echo Dots available for up to 60% off, Fire TV Sticks for as low as $11.99 and Fire Tablets available for up to 50% off.

Directly following the shopping holiday, Amazon announced that this was its strongest Prime Day ever, with over 300 million items sold and consumer electronics being one of the strongest performing categories. The latest data on consumer spending during June suggest that consumers were yet to make major changes to their spending habits despite red-hot inflation. This could all change if inflation remains at record levels in the coming months and eats away at consumers’ savings accounts. Upcoming financial results from retailers like Walmart, Best Buy and Target will be a key indicator of how consumers are faring.