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Don’t waste another dime on bloated channel reporting and vanity metrics.
Don’t waste another dime on bloated channel reporting and vanity metrics.
Check out December 2022 inflation data from the U.S. Consumer Price Index and Adobe Digital Price Index.
Like the temperature outside, inflation started coming down in October, and ended the year at its coolest point.
Data for December 2022 showed that deceleration of price increases became a three-month trend to end the year. While inflation remains high and holiday discounting created some noise in the data, the price increases that overheated to 40-year highs in June are relenting.
Let’s take a look at key figures from the Consumer Price Index and the Adobe Digital Price Index.
The federal government's most closely-watched inflation gauge pointed downward in December.
Prices across the U.S. economy fell 0.1% on a monthly basis, according to the Consumer Price Index. On an annual basis, the inflation rate cooled to 6.5%, which is down from 7.1% in November. The annual rate marked the lowest increase since October 2021, when inflation began its upward march in earnest amid supply chain chaos.
A decrease in gas prices was “by far” the biggest contributor to the monthly decrease, per the CPI report. On an annual basis, the increases in food and energy were below totals recorded for November.
Food inflation continues to be volatile. Even as the overall rate of monthly food inflation slowed to 0.3% in December from 0.5% in November, three of the primary categories showed increases. Egg prices increased 11.1% for the month. The food at home index, which measures groceries, continues to run well ahead of the overall inflation rate at 11.8% year-over-year, with cereals and bakery rising 16.1%.
Core inflation, which leaves out volatile food and energy prices, rose 5.7% on an annual basis, also below November’s reading. On a monthly basis, the core inflation rate of 0.3% was slightly above the 0.2% increase in November. Increases in shelter prices continued to drive this number up. Among consumer categories, increases in apparel and household furnishings were also among the key drivers, while personal care prices decreased slightly for the month.
Is three a trend? The slowdown in price increases began in October, and continued throughout the final three months of the year. This came after the Federal Reserve aggressively rose interest rates to combat inflation for much of 2022. As we begin 2023, prices are still high, though they are falling. Interest rates are still high, and the Fed intends to keep them there. The effects of both of these forces will continue to filter out across the economy, and weigh on consumers who are proving more cautious with discretionary funds. The bigger trend won't change in a month, but this latest inflation report is a sign that things are heading in the right direction.
Digital Price Index vs. Consumer Price Index, 2019-2022. (Courtesy of Adobe)
Ecommerce prices had a mixed record in December.
On an annual basis, online prices fell 1.6% in December compared to the same month of 2021, according to the Adobe Digital Price Index.
But, on a monthly basis, prices rose 1.1%. indicating that November’s Cyber Week discounts were particularly deep.
Holiday deals continued to drive down prices, as nine of the 18 categories tracked by the DPI recorded price decreases.
Computers fell 16.2% year-over-year.
Electronics prices fell 12% year-over-year.
Toys decreased 7.1% year-over-year.
Sporting goods fell 5.9% year-over-year.
On a monthly basis, each of these categories increased or were flat, showing the impact of Cyber Week's massive deals. Only six categories saw prices fall month-over-month.
Inflation also continued to cool in non-promotional categories that weren’t subject to holiday discounting.
Grocery prices continued to decelerate, even as they followed the highs of food inflation across the economy. They were up 13.5%, continuing a steady decrease from September’s record high of 14.3%.
Personal care prices rose 1.6% year-over-year, which was down from increases that reached as high as 3% in October.
Medical equipment and supplies also fell 4.1%, which was also down from 6.6% in November and 5.3% in October.
Nine categories saw price increases in all. Others seeing increases were apparel, pet products and furniture/bedding.
Overall spending in ecommerce reached $95.1 billion for December, according to Adobe. That’s a 5.8% increase over the record-setting figures of 2021. While the overall spending figure is not adjusted for inflation, Adobe notes that the increase was “clearly driven by net-new demand, not higher prices.."
Price changes by category, Adobe DPI. (Courtesy of Adobe)
The cuts amount to 4% of the ecommerce platform's workforce.
On ebay's campus. (Photo by Flickr user Kazuhisa OTSUBO, used under a Creative Commons license)
eBay is set to become the latest ecommerce platform to conduct layoffs.
The company announced plans on Tuesday to lay off 500 employees, which amounts to about 4% of its workforce. Layoffs were set to take place over the next 24 hours, the company said Tuesday evening.
In an SEC filing, CEO Jamie Iannone said the decision to make layoffs came after consideration of the macroeconomic environment and where the company could best invest for the long-term.
Iannone said the moves “are designed to strengthen our ability to deliver better end-to-end experiences for our customers and to support more innovation and scale across our platform.”
“Importantly, this shift gives us additional space to invest and create new roles in high-potential areas — new technologies, customer innovations and key markets — and to continue to adapt and flex with the changing macro, ecommerce and technology landscape,” Iannone wrote. “We’re also simplifying our structure to make decisions more effectively and with more speed.”
eBay is one of the oldest ecommerce platforms, and remains an active marketplace for both new and resale items. The San Francisco-based company has yet to report results for the fourth quarter of 2022. In the third quarter, the company said gross merchandise volume was down 11%, and revenue was down 5% year-over-year.
Yet the company has also continued to invest. In 2022, it acquired collectibles platform TCGPlayer and myFitment, which provides parts and accessories for automotive and powersports. It also opened a secure vault for trading cards, and launched livestreaming.
eBay is also seeing a boost from advertising, with revenue driven by promoted listings up 19% in the third quarter.
With the layoffs, eBay joins other tech companies that provide the infrastructure of ecommerce in making layoffs. Amazon, Shopify, Salesforce, BigCommerce and Wayfair have all recently announced layoffs. Technology giants like Meta, Google and Microsoft have also made job cuts.
It comes as inflation is weighing on consumers’ discretionary spending, and the return to more in-person shopping throughout 2022 led to a correction following aggressive hiring during the pandemic.