Adobe Data: In July Online Prices Decreased for First Time in 25 Months
Adobe released its July online inflation data from the company’s Adobe Digital Price Index (DPI) showing online prices decreased 1% year-over-year (YoY).
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After 25 consecutive months of persistent inflation online, eCommerce entered deflation in July, potentially starting a new trend as in the last few months inflation had slowed considerably.
Most of the categories tracked by the DPI (14 out of 18) saw month-over-month (MoM) price decreases in July.
Prices for electronics, the largest category in eCommerce with an 18.6% share of spending in 2021, fell sharply and decreased 9.3% YoY (down 2% MoM).
This is a greater YoY decrease than June (down 7.3% YoY) and May (down 6.5% YoY).
Prices for apparel fell 1% YoY (down 6.3% MoM), marking the second consecutive month where prices fell after dropping 0.1% YoY in June.
Apparel prices had increased for 14 consecutive months since April 2021, spiking in recent months (up 9% YoY in May, 12.3% YoY in April and 16.3% YoY in March).
Toy prices fell significantly, dropping 8.2% YoY (down 2.9% MoM), a record YoY low for the category in the last 31 months.
Food costs remained high, however, with grocery prices rising 13.4% YoY (up 1.4% MoM), a record YoY high and the largest increase of any category.
In July, consumers spent $73.7 billion online, $400 million less than the prior month ($74.1 billion).
On a YoY basis, however, eCommerce spend in July grew 20.9%, with Prime Day driving record online sales for the retail industry overall.
Online spending in July also decreased compared to May ($78.8 billion) and April ($77.8 billion).
Online commerce demand remains resilient on a year-to-date basis, with consumers spending $525.4 billion online in 2022 so far, growing 9.2% YoY.
“Wavering consumer confidence and a pullback in spending, coupled with oversupply for some retailers, is driving prices down in major online categories like electronics and apparel. It provides a bit of relief for consumers, as the cost of food continues to rise both online and in stores.”Patrick Brown, vice president of growth marketing and insights, Adobe
In July, 11 of the 18 categories tracked by the DPI saw YoY price increases, with groceries rising the most.
YoY Price drops were observed in seven categories: electronics, jewelry, books, toys, computers, sporting goods and apparel.
Only 4 of the 18 categories in the DPI saw price increases MoM.
MoM Price drops were observed across 14 categories including electronics, personal care products, office supplies, jewelry, books, furniture/bedding, toys, home/garden, appliances, flowers/related gifts, computers, sporting goods, medical equipment/supplies and apparel.
Notable Categories in the Adobe Digital Price Index for July
Electronics: Prices were down 9.3% YoY (down 2% MoM), bringing it back to pre-pandemic levels when electronic prices fell 9.1% YoY on average between 2015 and 2019. As the biggest category in eCommerce by share of spend, price movements have an outsized impact on overall inflation online.
Apparel: Prices were down 1% YoY while falling significantly on a monthly basis (down 6.3% MoM). This is the first notable YoY decrease for the category, as prices only fell by 0.1% YoY in June. It comes after 14 consecutive months where prices had risen consistently, reversing a predictable pattern of heavy discount periods.
Toys: Prices were down 8.2% YoY (down 2.9% MoM), the largest YoY drop for the category since December 2019, when prices were down 10% YoY during the holiday shopping season. This is the 16thconsecutive month of deflation for the category after prices had risen 0.2% YoY in March 2021.
Groceries: Prices continued to surge and rose 13.4% YoY (up 1.4% MoM), more than any other category. It is a new YoY record, following a 12.4% YoY increase in June, an 11.7% YoY increase in May and a 10.3% YoY increase in April—all previous record highs. Grocery prices have risen for 30 consecutive months, and it remains the only category to move in lockstep with the Consumer Price Index on a long-term basis.
Pet Products: Prices were up 12.6% YoY (up 1.7% MoM), a record YoY high for the category. This follows an 11.3% YoY increase in June, and a 9.1% YoY increase in May. Online inflation for pet products has now been observed for 27 consecutive months, as pet ownership surged during the COVID-19 pandemic and demand for related goods remains high.
Adobe Digital Price Index (DPI) 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 online prices.
The Fisher Price Index uses quantities of matched products purchased in the current period (month) and a previous period (previous month) to calculate the price changes by category.
Adobe’s analysis is weighted by the real quantities of the products purchased in the two adjacent months.
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Editorial Note: This post is from a Company Press Release and may have been modified for clarity.