Economy
12 July 2022
Online inflation cools in June
But grocery prices were up 12%, says the Adobe Digital Price Index.
Digital inflation for groceries since 2015. (Courtesy of Adobe)
Ecommerce is delivering some relief from rising prices across the consumer economy, new monthly data shows.
Online inflation continued to cool off in June, according to the Adobe Digital Price Index.
The latest reading from Adobe Analytics states that online prices were up .3% year-over-year for the month. On a month-over-month basis, prices were down 1%.
These numbers come a day ahead of the economy’s overall inflation reading from the US Census Bureau’s Consumer Price Index. Last month, that measure showed a 40-year-high increase of 8.6% year-over-year. This led the Federal Reserve to raise interest rates .75% in an effort to cool demand.
When it comes to ecommerce, the latest Digital Price Index data shows some moderating. Decreases were visible in key categories tracked by Adobe Analytics:
- Apparel prices fell .1% year-over-year, and 4.06% month-over-month. This comes after prices in this category increased year-over-year in May.
- Electronics prices recorded their largest year-over-year decrease since May 2020, falling 7.28%. There was some relief on a month-over-month basis, however, as prices fell 1.34% month-over-month.
- Toys saw a year-over-year decrease of 4.81%, with a slight month-over-month uptick of .16%.
Digital inflation since 2015. (Courtesy of Adobe Analytics)
At a time of rising inflation, the report also featured plenty of spikes. In all, 11 of the 18 categories tracked by Adobe saw prices go up. Some of the most popular ecommerce categories set new inflation records:
- Grocery prices were up 12.44% year-over-year, setting a new record. It’s the fifth straight month of significant price increases in this category, and the 29th straight month overall of rising prices. This mirrors rising costs of food in the wider economy. It was up .7% month-over-month.
- Pet products saw prices rise 11.35% year-over-year, which was the latest in a series of annual record highs in this category. Month-over-month, prices in this category rose 2.01%.
- Tools and home improvement rose 10.44% year-over-year, which also drove this category to a record annual increase. It was the 19th straight month that prices went up on a year-over-year basis. Prices were up .6% year-over-year in this category.
(Chart via Adobe Analytics)
Adobe Analytics also provided key data on spending for the year so far:
- In all, consumers spent $451.7 billion online, with the six-month total growing 7.5% year-over-year.
- For June consumers spent $74.1 billion online, which is roughly 1% year-over-year growth.
- Spending for the month was down when compared to May ($77.8 billion) and April. and May ($78.8 billion).
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Let’s dig in:
Headline inflation cooled in the slightest of ways in April. The Consumer Price Index reported the following for April 2023:
Inflation rose 4.9% from a year before, down just slightly from the 5% gain in March.
On a monthly basis, inflation rose 0.4%, which was up from 0.1% in March.
Core inflation, excluding food and energy, rose 5.5%.
Shelter remained the greatest contributor to the core inflation, rising 8.1%.
Food at home, which includes groceries, rose 7.1%, continuing a marked deceleration in this category.
What it means: Inflation is continuing its comedown from the highs of 2022, but it has not been a fast fall. The slight downtick observed in the numbers will do little to change consumer behavior from its current “frugal mindset,” said GlobalData Managing Director Neil Saunders.
"Unfortunately, we are currently in a period where the consumer economy is neither accepting of a new price level nor is sufficiently convinced that prices are coming down anytime soon," Saunders wrote. "Households are also facing higher debt servicing costs from elevated interest rates. There is really nothing in the economic data to produce a feel-good factor. This means many money-saving behaviors will persist for at least the balance of this year."
Online prices fell more markedly than those in the wider economy for April. The Adobe Digital Price Index reported the following for April 2023:
Online prices dropped 1.8% compared to April 2022, marking the eighth straight month of decline.
On a monthly basis, prices fell 0.7% from March.
Eleven out of 18 categories saw falling prices on an annual basis.
Here’s a look at key categories that saw declines:
Grocery prices were up 9.3% year-over-year, but continued a decline that has been underway for a number of months. At peak, online grocery inflation reached 14.3% in September 2022.
Personal care prices were up 3%, which was also a decline from the 4.3% observed in March. This category spiked to a 6% increase in February, and has been declining since.
Appliances fell 7.1%, which was the largest year-over-year drop for this category since Adobe’s tracking began in 2014.
Sporting goods marked the twelfth consecutive month of price declines, with a 6.4% year-over-year drop. Prior to that sporting goods prices rose for 28 straight months.
Other notable declines included toys (down 5.9% YoY), home/garden (down 5.6% YoY) and electronics (11.6% YoY).
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