After two straight years of inflation online, the rate of price increases on the internet has slowed for two months in a row.
That’s according to the latest data released by Adobe, which reported Thursday that online prices in May were up 2 percent on an annual basis, but down from the 2.9 percent year-over-year increase in April and the record 3.6 percent year-over-year increase in March. Month-over-month, online prices decreased 0.7 percent.
Online prices for apparel in May increased 9 percent year-over-year, but were down 1.5 percent month-over-month, and down from the 12.3 percent year-over-year increase in April, the 16.3 percent year-over-year increase in March, and the 16.7 percent increase in February.
“While the category has now seen 14 months of online inflation, reversing a predictable pattern of heavy discounting periods, there are continued signs that prices are beginning to ease,” Adobe stated in its report.
Electronics prices online in May were down 6.5 percent year-over-year, down 1.4 percent month-over-month. In April, prices on electronics were down 5.2 percent year-over-year.
Toy prices online in May were down 6.5 percent year-over-year, and down 1.3 percent month-over-month, a record low for the category over the last 24 months.
Still, online prices for groceries have not eased. They rose 11.7 percent year-over-year — a record high for the year — and 1.3 percent month-over-month.
May marked the first month where online prices for groceries have risen more than any category, overtaking apparel which previously had the steepest price increases online.
In total, shoppers spent $78.8 billion online in May, up 7.1 percent year-over-year. That’s $1 billion more than April, when consumers spent $77.8 billion online, but below the $83.1 billion spent in March.
In 2022 so far, consumers have spent a total of $377.6 billion online, growing 8.9 percent year-over-year. Consumer spending online for all of 2021 increased 9 percent.
Adobe’s findings indicate that consumers have pulled back on discretionary spending, which would help slow the rate of inflation.
“Despite the modest increase in consumer spending online, an uncertain economic climate and rising costs in core areas like groceries are putting a hamper on overall demand,” said Patrick Brown, vice president of growth marketing and insights, Adobe. “Slower consumer spending on discretionary items has driven slower, single digit e-commerce growth since March, and this pullback mirrors the easing in online inflation.”
“E-commerce data has become an important input for measuring inflation as daily activities, including shopping, become more and more digital,” said Marshall Reinsdorf, former senior economist at International Monetary Fund. “In an uncertain economic environment, Adobe’s Digital Price Index is a timely indicator that often mirrors inflation movements happening offline while highlighting the tendency for inflation to be lower in the digital economy.”
Adobe extracts online inflation data from its Digital Price Index, powered by Adobe Analytics, analyzing 1 trillion visits to retail sites and more than 100 million stock keeping units across 18 product categories.
The DPI 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. 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. The methodology was first developed alongside renowned economists Austan Goolsbee and Pete Klenow.
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