The latest online inflation data from Adobes Digital Price Index (DPI) covering the month of January 2023 shows that online prices declined 1.0% year-over-year (YoY).
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What you need to know: This marks the fifth successive month of a YoY price decrease, with half of the 18 categories tracked by Adobe seeing falling prices on an annual basis.
But online prices did go up 1.7% in January over December, after strong holiday discounts by merchants during the heart of the holiday shopping season.
January’s YoY price decline was primarily driven by sharp drops in the electronics category which were down 11.9% YoY, but up 2.1% Month-over-Month (MoM) as well as computers (down 15.8% YoY, up 2.1% MoM).
Consumers also saw prices fall YoY for home goods. Appliances were down 2.5% YoY (up 1.8% MoM), while home/garden products declined 3.5% YoY (up 1.2% MoM). The good news is that online prices in both categories have now dropped YoY for three consecutive months.
Sporting goods hit a record YoY low, falling 6.4% (up 0.6% MoM). Other notable categories with YoY price drops include toys (down 5.5% YoY, up 4.9% MoM), books (down 3% YoY, flat MoM) and jewelry (down 0.9% YoY, up 5.8% MoM).
In certain categories with persistent inflation, YoY price increases have slowed recently.
The grocery category tops this list with prices up 12.6% YoY (up 0.4% MoM), but showing a slight easing over December 2022’s 13.5% YoY increase. This marks the fourth consecutive month when YoY price increases for groceries have decelerated from September’s record high, when prices rose 14.3% YoY.
In the tools/home improvement category, prices rose 6.9% YoY (up 0.1% MoM), down from December 2022’s 8.3% YoY increase. Pet product prices rose 10.5% YoY (up 0.8% MoM), down from the 11% YoY increase in December 2022.
What they said: “The rising cost of living has made consumers more cautious about discretionary spending, with $72.2 billion spent online in January, a modest increase of 1.7% year-over-year,” said Patrick Brown, vice president of growth marketing and insights at Adobe.
“Current demand levels are driving retailers to hold prices down and continue to clear out excess inventory.
“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.”
Adobe DPI Category Highlights for January
Go deeper: As noted earlier, in January, nine of the DPI’s 18 categories saw YoY price decreases, with the flowers/related gifts category falling the most at 21.6% YoY.
Nine categories experienced YoY price increases, including personal care, office supplies, furniture/ bedding, pet products, groceries, non-prescription drugs, tools/ home improvement, medical equipment/supplies and apparel.
On a MoM basis, only one of the 18 categories in the DPI (flowers/related gifts) saw prices fall, following persistent holiday discounts in December 2022.
Home and Garden: Prices were down 3.5% YoY (up 1.2% MoM), marking the third consecutive month when prices fell on an annual basis (down 2.7% YoY in December, and down 2.1% YoY in November). This comes after prices for the category rose for 14 consecutive months, peaking at 2.7% YoY in March 2022.
Sporting Goods: Prices were down 6.4% YoY (up 0.6% MoM), a record YoY drop for the category since Adobe began tracking online prices in 2014.
Prices for the category have now fallen YoY for nine consecutive months, beginning in May 2022; prior to that, prices had risen YoY for more than two consecutive years (28 months).
Groceries: Prices rose 12.6% YoY (up 0.4% MoM) but have slowed in the past four months, rising 13.5% YoY in December, 13.7% YoY in November, and 14% YoY in October.
In September, prices peaked, rising 14.3% YoY. Consumers are increasingly buying more of their groceries online, and this category has generally moved in lock step with the Consumer Price Index.
Tools and Home Improvement: Prices rose 6.9% YoY (up 0.1% MoM) but have slowed in the past five months after peaking in August 2022, when prices rose 10.9% YoY.
The slowing of price increases is welcome news for consumers, as the category has seen persistent inflation for more than two consecutive years (26 months).
What Is the Adobe DPI?
Using the Fisher Price Index, the Adobe DPI tracks ecommerce prices in 18 categories and is modeled after the Consumer Price Index (CPI), published by the U.S. Bureau of Labor Statistics.
The Fisher Price Index uses quantities of matched products purchased in the current period (month) and a previous period (previous month) to calculate price changes by category.
Adobe’s analysis is weighted by the real quantities of the products purchased in the two adjacent months.
More details: To stay on top of the latest online inflation data, follow the Adobe Digital Price Index here.
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