Adobe: Overall online prices dropped in July — but one category hits record YOY high
Consumers got some relief in July — at least online — as overall prices dropped after 25 straight months of inflation.
Online prices dropped 1% year-over-year and 2% month-over-month in July, according to the Adobe Digital Price Index. Most (14 out of 18) of the categories tracked by Adobe saw month-over-month price decreases in July. Electronics, apparel and toys drove down prices online, while food costs remained high, with a record year-over-year high and the largest increase of any category. Tools/home improvement, pet products and non-prescription drugs also saw online prices rise in July. (See category listing at end of article.)
The decrease in July came after prices increased 0.3% year-over-year in June and 2% year-over-year in May. July is the first month where e-commerce entered deflation, Adobe noted.
Consumers spent $73.7 billion online in July, down from $74.1 billion in June. On a year-over-year basis, however, e-commerce spend in July grew 20.9%, with Prime Day driving record online sales for the retail industry overall
“Wavering consumer confidence and a pullback in spending, coupled with oversupply for some retailers, is driving prices down in major online categories like electronics and apparel,” said Patrick Brown, VP of growth marketing and insights, Adobe. “It provides a bit of relief for consumers, as the cost of food continues to rise both online and in stores.”
Categories
• Electronics: Prices for electronics, the largest category in e-commerce with 18.6% share of spend in 2021, fell sharply and decreased 9.3% year-over-year and 2% month-over-month.
• Apparel: Prices were down 1% year-over-year and 6.3% month-over-month. It is the first notable year-over-year decrease for the category and comes after 14 consecutive months where prices had risen consistently, reversing a predictable pattern of heavy discount periods.
• Grocery: Food costs remained high with grocery prices rising 13.4% year-over-year and 1.4% month-over-month, a record year-over-year high and the largest increase of any category. Grocery prices have risen for 30 consecutive months, and it remains the only category to move in lockstep with the Consumer Price Index on a long-term basis.
• Toys: Toy prices fell significantly, dropping 8.2% year-over-year (the largest drop for the category since December 2019) and 2.9% month-over-month, a record year-over-year low for the category in the last 31 months. This is the 16th consecutive month of deflation for the category, after prices had risen 0.2% year-over-year in March 2021.
• Pet Products: Prices were up 12.6% year-over-year and 1.7% month-over-month, a record year-over-year high for the category. This follows an 11.3% year-over-year increase in June, and a 9.1% year-over-year increase in May.
Online inflation for pet products is now in its 27th consecutive month, as pet ownership surged during the COVID-19 pandemic and demand for related goods remains high.
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.