Online prices fell 1% in January, 5th straight month of deflation

The Adobe Digital Price Index showed price drops in electronics and home goods.

card near computer

For the fifth straight month, online prices continued to show signs of deflation to start 2023.

The Adobe Digital Price Index came in with the following readings for January 2023:

  • Year-over-year, online prices fell 1% from January 2022.
  • Month-over-month, prices were up 1.7%, as holiday discounts lifted.
  • Online spending as a whole was $72.2 billion, up a modest 1.7% from January 2022.

What’s driving the data? “Current demand levels are driving retailers to hold prices down and continue to clear out excess inventory,” said Patrick Brown, VP of growth marketing and insights at Adobe. “As shoppers become more selective in where they spend their money, ecommerce will be an important battleground this year as brands seek to retain customers and drive experience-led growth.”

Chart showing digital prices

Adobe Digital Price Index: 2015-2023. (Courtesy photo)

Category trends

Overall, category-level data shows that inflation is reversing across ecommerce.

Half of the 18 categories tracked by Adobe showed falling prices on an annual basis. This included:

  • Electronics prices fell 11.9% year-over-year, while computers fell 15.8%.
  • Home goods: Appliances fell 2.5% year-over-year, while home and garden products fell 3.5%.
  • Sporting goods fell 6.4%, which was a record low.

There was also cooling inflation in categories that have seen persistent price increases:

  • Grocery prices rose 12.6% year-over-year, which was down from 13.5% in December. It’s the fourth straight month of cooling prices, as the grocery category in the DPI has been in line with the overall Consumer Price Index.
  • Tools/home improvement rose 6.9%, down from 8.3% in December. This category saw 26 months of inflation.
  • Pet products rose 10.5%, down from 11% in december.

Still, the shift away from the holiday season – and its massive discounting to drive spending among cautious consumers amid inflation – meant prices ticked up on a short-term basis. Of the 18 categories tracked, only flowers and gifts (-4.29%) saw prices decrease on a monthly basis.

The takeaway: Despite the seasonal shift with the holidays, online prices are continuing to fall over the long haul. This is happening at the same time as inflation is cooling in the overall economy. After months of price increases and continued pressure from rising interest rates, consumer behavior may not change in lockstep with this data. But it’s another sign that ecommerce prices are heading in the direction of relief.

chart showing adobe price increase

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