Adobe: Online inflation falls again in March

U.S. online shoppers had some luck in March 2023 as the cost of e-commerce decreased for the seventh straight month.

Online prices in March 2023 fell 1.7% year-over-year (YoY), marking the seventh consecutive month of YoY price decreases, according to the Adobe Digital Price Index (DPI), based on Adobe Analytics. More than half of the categories (10 of 18) tracked by Adobe saw falling prices on an annual basis. On a month-over-month (MoM)  basis, Adobe data indicates online prices in March remained flat (up 0.03%).

Adobe data reveals that YoY price decline was driven by steep drops in categories such as electronics (down 12.9% YoY, down 1.3% MoM) and toys (down 6.6% YoY, down 1.2% MoM). Prices also fell YoY in home goods categories. Appliances were down 4.9% YoY (up 0.8% MoM), while home & garden products fell 4.9% YoY (down 0.3% MoM), and the furniture & bedding category fell 0.9% YoY (down 0.3% MoM).

In certain categories with persistent inflation, Adone is tracking slowing YoY price increases in recent months. Grocery prices were up 10.3% YoY (up 0.4% MoM), down from February 2023’s 11.4% YoY increase. This marks the sixth consecutive month where YoY price increases for groceries have decelerated from September’s record high, when prices rose 14.3% YoY.

In the personal care category, prices were up 4.4% YoY (down 1.5% MoM); In contrast, personal care prices rose 6.1% YoY February 2023. Prices in apparel rose 6.6% YoY (up 1.8% MoM)—an uptick from February 2023’s 5.1% YoY increase—but down from February 2022, when apparel prices were up 16.7% YoY.

Notable categories in the Adobe Digital Price Index for March

In March, ten of the DPI’s 18 categories saw YoY price decreases, with the flowers & related gifts category falling the most at 24.3% YoY. Eight categories experienced YoY price increases, including personal care, office supplies, pet products, groceries, non-prescription drugs, tools & home improvement, medical equipment & supplies and apparel.

 On a MoM basis, 10 of the 18 categories in the DPI saw prices fall. Price increases were observed in eight categories including office supplies, jewelry, pet products, groceries, non-prescription drugs, appliances, medical equipment & supplies and apparel.

Notable categories for March 2023 include:

• Groceries: Prices rose 10.3% YoY (up 0.4% MoM) but have slowed in the past six months, rising 11.4% YoY in February, 12.6% YoY in January, 13.5% YoY in December, 13.7% YoY in November, and 14.0% YoY in October. Consumers are increasingly buying more of their groceries online, according to Adobe, and this category has generally moved in tandem with the Consumer Price Index.
• Personal care: Prices were up 4.4% YoY (down 1.5% MoM), a smaller increase than the month prior when prices rose 6.1% YoY (February 2023). The category has seen persistent inflation online, Adobe says, with prices rising for 16 consecutive months after dropping 0.9% YoY in November 2021.
• Furniture & bedding: Prices were down 0.9% YoY (down 0.3% MoM), marking the second consecutive month where prices have fallen on an annual basis (down 0.1% YoY in February 2023). Prior to this, prices for the category had risen for 33 consecutive months, peaking in March 2021 (up 5.7% YoY). Consumers have become increasingly comfortable buying furniture online since the COVID-19 pandemic, according to Adobe analysis.
• Electronics: Prices have fallen sharply in this category in recent months, according to Adobe, dropping 12.9% YoY in March (down 1.3% MoM) and 12.6% YoY in February. As a major discretionary category, Adobe says electronics prices continue to see sharp drops even after the holiday shopping season, where prices fell 12.0% YoY in December 2022 and 13.4% YoY in November 2022 due to heavy promotions.
• Apparel: Prices were up 6.6% YoY (up 1.8% MoM). Although this is an uptick from the month prior—when prices rose 5.1% YoY in February 2023—price increases for the category have cooled in recent months, rising 5.1% YoY in January and 0.9% YoY in December.

The Adobe DPI is modeled after the Consumer Price Index (CPI), published by the U.S. Bureau of Labor Statistics and uses the Fisher Price Index to track online prices. The Fisher Price Index uses quantities of matched products purchased in the current period (month) and a previous period (previous month) to calculate the price changes by category. Adobe’s analysis is weighted by the real quantities of the products purchased in the two adjacent months.