Adobe sees inflationary pricing slowing online

Adobe announced that according to its Adobe Digital Price Index (DPI), online prices in May were up 2% year-over-year (YoY) – compared to 2.9% year-on-year in April and the record 3.6% year-on-year increase in March, while declining 0.7%. month-to-month (MoM) percentage.

The majority of categories tracked by the DPI (10 out of 18) saw MoM price declines in May.

Prices for electronics and apparel, major categories that accounted for 33% of e-commerce spending in 2021, continued to decline. Electronics prices were down 6.5% y/y (down 1.4% y/y), a bigger drop than in April (down 5.2% y/y) and a year-over-year record high for the category over the past 24 months. Clothing prices rose 9% year on year (down 1.5% month on month), down from the 12.3% year on year increase in April. Toys are down 6.5% year on year (down 1.3% month on month), a record low for the category in the past 24 months. Prices did not fall for groceries, rising 11.7% year-over-year (up 1.3% mo-mo), a year-over-year record for the category. This is the first month that grocery prices have risen the most of any category, overtaking clothing.

In May, consumers spent $78.8 billion online, representing year-over-year growth of 7.1%. That’s more than $1 billion more than the previous month, when consumers spent $77.8 billion online (4.5% year-over-year growth), and below $83.1 billion. dollars (7% year-over-year growth) spent in March. In 2022 so far, consumers spent a total of $377.6 billion online, growing 8.9% year-over-year.

“Despite the modest increase in online consumer spending, an uncertain economic climate and rising costs in key areas like groceries are hampering overall demand,” said Patrick Brown, vice president of growth and insight marketing. at Adobe. “The slowdown in consumer spending on discretionary items has slowed single-digit e-commerce growth since March, and the pullback reflects slowing online inflation.”

“E-commerce data has become an important input for measuring inflation as everyday activities, including shopping, become increasingly digital,” said economist Marshall Reinsdorf, former senior economist at the International Monetary Fund. . “In an uncertain economic environment, the Adobe Digital Price Index is a timely indicator that often reflects inflationary movements that occur offline while highlighting the downward trend in inflation in the digital economy. .”

DPI provides the most comprehensive view of the price consumers pay for goods online, as e-commerce expands into new categories and brands focus on personalization in the digital economy. Powered by Adobe Analytics, it analyzes one trillion retail site visits and over 100 million SKUs across 18 product categories: electronics, apparel, appliances, books, toys, computers, groceries, furniture /bedding, tools/home improvement, home/garden, pet products, jewelry, medical equipment/supplies, sporting goods, personal care products, flowers/related gifts, non-prescription drugs and office supplies.

In May, 12 of the 18 categories tracked by the DPI saw year-over-year price increases, with groceries rising the most. Price declines were seen in six categories: electronics, jewelry, books, toys, computers and sporting goods.

Eight of the 18 categories of the DPI saw their prices increase MoM. Price declines were seen in 10 categories, including electronics, personal care products, jewelry, books, toys, home/garden, appliances, computers, sporting goods and clothes.

Notable categories in the Adobe Digital Price Index for May:

  • Electronic: Prices fell by 6.5% over one year (down 1.4% over one month). This is the largest year-on-year decline for the category since May 2020, when prices were down 6.8% year-on-year. As the largest e-commerce category in terms of spend share, price movements have an outsized impact on overall online inflation.
  • Clothes: Prices increased by 9% over one year (down 1.5% over one month). While the category has now seen 14 months of inflation inline, reversing a predictable pattern of strong discount periods, there are continued signs that prices are beginning to decline; prices rose 12.3% year-on-year in April, 16.3% year-on-year in March and 16.7% year-on-year in February.
  • Toys: Prices fell 6.5% year on year (down 1.3% month on month), the largest year-on-year decline for the category since December 2019 before the COVID-19 pandemic, when prices had down 10% year over year during the holiday shopping season. It is also the 14th consecutive month of deflation for the category, with prices rising 0.2% year-on-year in March 2021.
  • Races: Prices continued to climb and were up 11.7% YoY (up 1.3% MoM), setting a new record on a yearly basis. This follows an increase of 10.3% year-on-year in April, 9% year-on-year in March and 7.6% year-on-year in February, all records. This is the first month that groceries rose more than clothing, which was still the top category for over a year. Grocery remains the only category to move in line with the CPI over the long term, with online prices now rising for 28 consecutive months.

Methodology

The DPI is modeled after the Consumer Price Index (CPI), published by the US Bureau of Labor Statistics and uses the Fisher Price Index to track prices online. The Fisher Price Index uses the quantities of matched products purchased during the current period (month) and a previous period (previous month) to calculate price changes by category. Adobe’s analysis is weighted by the actual quantities of products purchased in the adjacent two months. Powered by Adobe Analytics, Adobe uses a combination of Adobe Sensei, Adobe’s AI and machine learning framework, and manual effort to segment products into categories defined by the CPI manual.

Daniel C. Williams