After 25 consecutive months of persistent inflation, prices on merchandise sold online finally took a drop during July on an overall basis.
Online prices in July dropped 1 percent year-over-year and declined 2 percent, month-over-month, according to the latest findings from software giant Adobe, released Tuesday.
That’s a switch from June when online prices increased 0.3 percent year-over-year, and from May, when the prices rose 2 percent year-over-year.
Prices on 14 of the 18 categories tracked by Adobe declined last month. Electronics, apparel and toys drove down prices online, while food costs remained elevated.
U.S. consumers are pulling back on spending due to soaring inflation, which has happened for most of this year, fears of a looming recession, and the volatile stock market.
Consumers spent $73.7 billion online in July, down from $74.1 billion in June, Adobe reported. On a year-over-year basis, however, e-commerce spend in July grew 20.9 percent, 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).
“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,” said Patrick Brown, vice president of growth marketing and insights, Adobe. “It provides a bit of relief for consumers, as the cost of food continues to rise both online and in stores.”
According to Adobe, “Prices for electronics, the largest category in e-commerce with 18.6 percent share of spend in 2021, fell sharply and decreased 9.3 percent year-over-year, and 2 percent month-over-month.
In June, electronics prices online were down 7.3 percent year-over-year, and down 6.5 percent year-over-year last May.
Apparel prices had increased for 14 consecutive months since April 2021, and spiked in recent months. But in July, prices were down 1 percent, year-over-year, while falling 6.3 percent on a month-to-month basis. July marked the first “notable” year-over-year decrease for apparel, as prices only fell by 0.1 percent in June, Adobe indicated.
Toy prices in July dropped 8.2 percent year-over-year and 2.9 percent month-over-month.
Still, food costs in July remained high, rising 13.4 percent year-over-year and 1.4 percent month-over-month. Adobe said the food price hike was a record year-over-year high, and the largest increase of any category.
The Adobe Digital Price Index, developed by Adobe Analytics, analyzes one trillion visits to retail sites and over 100 million stock keeping units across 18 product categories.
Month-to-month price drops in July 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.
Groceries, tools/home improvement, pet products, and non-prescription drugs experienced inflation last month.
However, on a year-to-year basis, only seven of the 18 categories saw price drops: electronics, jewelry, books, toys, computers, sporting goods and apparel.
The Adobe Digital Price Index is modeled after the Consumer Price Index, published by the U.S. 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 month and a 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.
Adobe uses a combination of Adobe Sensei, Adobe’s AI and machine learning framework, and manual effort to segment the products into the categories defined by the CPI.