Ecommerce prices are in deflation, paced by electronics, home goods

Discretionary declines

The DPI showed marked price drops in key discretionary categories. This offers signs that consumers won’t see as much sticker shock when they face a choice about a product that goes beyond a basic need.

Electronics, which is the largest ecommerce category, saw prices fall 12.9% year-over-year, and decline 1.3% month-over month. This shows continued staying power for electronics price deflation, even after the sharp discounts of the holiday season.

Toy prices fell 6.6% year-over-year, and 1.2% month-over-month.

Home goods prices also fell. Furniture and bedding prices were down 0.9% year-over-year, and fell 0.3% month-over-month. That’s the second straight month that prices feel on an annual basis, following a 33-month string of price increases. Appliances and home/garden products each fell 4.9% year-over-year.

Demand for furniture remained high despite the price increases. Adobe previously noted that February 2023 saw a 12.9% year-over-year increase in spending for home furnishings, following a 10.2% year-over-year increase in 2022.

“Consumers have become increasingly comfortable buying furniture online, after a pandemic where many wanted to spruce up their living spaces and had no choice but to tap ecommerce,” Adobe notes.

In all, 10 of the 18 categories tracked by Adobe showed price decreases for the year.

Essentials show continued, yet cooling, inflation

Yet consumers are still facing tough choices. Key categories that reflect the products consumers need for day-to-day life are still showing inflation, even as the price increases cool.

Grocery prices were up 10.3%, and rose 0.4% month-over-month. This is the latest slowdown in the category, falling off from an annual peak of 14.3% in September. Yet, as with the Consumer Price Index, it remains true that consumers are paying more for food. Still, the price increases aren't stopping online grocery from picking up. This category surged to 26.7% year-over-year growth in February, following 10.2% annualized growth in 2022. What became a necessity during the pandemic is now a choice consumers are making for convenience.

Personal care items saw prices rise 4.4% year-over-year, while falling 1.5% on a monthly basis. This carries on price increases in the category for a 16th straight month, but was also a smaller increase than February, when prices rose 6.1%.

Apparel prices rose 6.6% year-over-year, and 1.8% month-over-month. This is an increase from February, but Adobe noted that there has been cooling overall in the category in recent months. A year ago, apparel prices were up 16.7% in February 2022.

Pet product prices rose 11.2% on an annual basis, and 1.9% month-over-month.

The bottom line: Inflation remains a mixed bag in ecommerce, but overall there are plenty of signs that prices are trending down from their peak. With prices for essentials still going up, brands and retailers must be mindful that consumers will be weighing discretionary purchases carefully, even as lower prices help to take some of the edge off of the decision. It's important to zoom out and remember that inflation hasn't completely curbed demand, especially in top ecommerce categories. All signs indicate that consumers are still shopping, so a strong brand and execution can help light the way to sales.