Half of U.S. Dynamic Price Moves Are Cuts, Not Hikes, Study Finds

Half of the U.S. price changes tracked by web data company Decodo in 2025 were decreases — the opposite of what most consumers assume about dynamic pricing. Gabriele Vitke, a senior product marketing manager at Decodo, said the finding contradicts the belief that algorithm-driven pricing only pushes prices up. The data covered electronics, clothing and home improvement supplies.

Yet the perception problem is real, and it is drawing regulators. Legislators in at least 30 states have considered pricing bills this year, including measures on algorithmic and personalized pricing, according to the National Conference of State Legislatures. The Federal Trade Commission has proposed an enforcement policy warning businesses that failing to disclose their use of personal data to set individualized prices could violate consumer protection law.

"There are major tensions happening right now between who's really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper," said Katie Thomas, who leads an internal consumer behavior think tank at the consulting firm Kearney.

Digital price tags are replacing paper ones across U.S. grocery aisles. AI tools now help businesses predict how customers respond to different price points. Terms like "dynamic pricing" and "surveillance pricing" circulate on social media, where users suspect different people pay different prices for the same product.

What does dynamic pricing actually change?

Dynamic pricing means adjusting prices in response to market conditions, including supply and demand. Airlines that move ticket prices as departures approach use it. Uber's rush-hour fare increases are a version called surge pricing.

The Decodo data suggests frequent price changes cut both ways. Consumers accept it for flights, hotels and rides. The prospect of everyday grocery spending shaped by opaque algorithms and shared personal data has touched a nerve.

Are digital shelf labels a surge-pricing threat?

Walmart plans electronic shelf labels in all its U.S. stores, and Whole Foods uses them too. Social media posts falsely imply the labels scan shoppers' faces or cellphones to set individualized prices, Thomas said.

Walmart CEO John Furner addressed the concern in a blog post last month. He said digital tags save workers' time and keep prices current, and that the labels are not used to raise prices based on weather, time of day or individual shopper.

"We price the product, not the person," Furner wrote.

Researchers who tracked prices at an unnamed grocery chain found "virtually no surge pricing" after the labels were introduced. Retailers typically update electronic shelf prices weekly, because shoppers value consistency, said Asa Farquhar of retail technology company Relex Solutions.

"Changing prices throughout the day, the way airlines or rideshare apps do, is exceedingly rare in grocery and general merchandise today," Farquhar said.

Where does personalized pricing stand legally?

Personalized pricing means offering different prices based on locations, incomes, browsing habits and other individual data. Some advocacy groups and regulators call it "surveillance pricing." An FTC staff report released in January 2025 found intermediaries offering price-tailoring tools worked with at least 250 clients, including grocery and clothing retailers.

Three states have acted:

• Maryland and New Jersey restricted use of personal data for grocery pricing, with exceptions for certain loyalty discounts and promotions.
• Connecticut's law covers a broader range of retail purchases.

California prosecutors sued Target in 2022, alleging its app displayed lower prices before shoppers entered stores and raised them once inside. Target agreed to a $5 million settlement and a ban on using geofencing technology to increase prices. The retailer said the feature was used to "provide guests with accurate pricing, which can vary across stores and channels" and that it remains "committed to clear, transparent pricing."

Different prices do not always mean personal data was used. A 2024 investigation by Consumer Reports, Groundwork Collaborative and More Perfect Union found Instacart showed shoppers different prices for identical products at the same stores. Instacart ended what it called tests that randomly assigned shoppers to groups, not prices based on personal information.

How far does algorithmic pricing go?

Algorithmic pricing uses software to recommend or set prices automatically, a decades-old practice that AI now accelerates. Simon-Kucher, a global consulting company, surveyed more than 2,200 business leaders in 28 countries and 39 industries last year. 41% said they used AI software to gather market intelligence, including competitors' prices. Another 28% used it for "real-time price optimization" — choosing prices that advance goals such as higher profits or clearing unsold goods.

The National Retail Federation said algorithmic pricing is a new method of what retailers have always done: adjust prices to supply, demand, seasonality and competitors.

Some lawsuits claim the practice undermines competition. The FTC's 2023 anti-monopoly suit against Amazon challenged an algorithmic tool codenamed Project Nessie. The agency alleged Amazon used it to identify products whose prices it could raise with competitors likely to follow, generating more than $1 billion in excess profits. A trial is scheduled for next year. Amazon said the allegations "grossly mischaracterize" the tool, which it said was scrapped before the lawsuit.

A recent consumer lawsuit against McDonald's alleged its pricing system used nonpublic sales data from competing locations to coordinate prices. McDonald's called the suit "filled with inaccuracies" and said the tool helps U.S. franchisees set prices at their individual restaurants.

The regulatory map will keep shifting as the Amazon trial approaches and more states weigh restrictions on data-driven pricing.