Adobe: January marks fifth straight month of falling online prices

U.S. online inflation continued its pattern of easing in January 2023.

Online prices decreased 1% year-over-year (YoY) while rising 1.7% month-over-month (MoM) in January 2023, according to the latest Adobe Digital Price Index (DPI) figures, based on Adobe Analytics. This marks the fifth consecutive month when online prices have decreased on a YoY basis.

Nine of the 18 product categories tracked in the DPI experienced YoY online price decreases. The end of holiday discounts that slashed online prices in December 2022 contributed to the month-over-month prices increase.

According to Adobe analysis, January’s YoY online price decline was primarily driven by sharp drops in electronics (down 11.9% YoY, up 2.1% MoM) and computers (down 15.8% YoY, up 2.1% MoM). Consumers also saw online prices fall YoY in several home goods categories.

Appliances were down 2.5% YoY (up 1.8% MoM), while home/garden products fell 3.5% YoY (up 1.2% MoM). Online prices in both categories have now fallen YoY for three consecutive months. Sporting goods hit a record YoY low, falling 6.4% (up 0.6% MoM), with other notable categories with YoY price drops including 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 online product categories where Adobe has been tracking persistent inflation, YoY price increases have slowed in recent months. Grocery prices were up 12.6% YoY (up 0.4% MoM), down from the 13.5% YoY increase Adobe observed in December 2022.

This marks the fourth consecutive month where YoY online price increases for groceries have decelerated from the record high observed in September 2022, when prices rose 14.3% YoY. In the tools/home improvement category, prices rose 6.9% YoY (up 0.1% MoM), down from the 8.3% YoY increase reported in December 2022. Pet product prices rose 10.5% YoY (up 0.8% MoM), down from the 11% YoY increase seen in December 2022. 

Notable categories in the Adobe Digital Price Index for January

Adobe’s Digital Price Index provides the most comprehensive view into how much consumers pay for goods online, complementing the Bureau of Labor Statistics’ Consumer Price Index, which captures offline prices. Powered by Adobe Analytics, the DPI analyzes one trillion visits to retail sites and over 100 million SKUs across 18 product categories: electronics, apparel, appliances, books, toys, computers, groceries, furniture/bedding, tools/home improvement, home/garden, pet products, jewelry, medical equipment/supplies, sporting goods, personal care products, flowers/ related gifts, non-prescription drugs and office supplies.

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. 

[Read more: Adobe: Toys, Cyber Week, discounts helped drive record online holiday sales]

Notable Adobe Digital Price Index categories for January 2023

Home and Garden: Prices were down 3.5% YoY (up 1.2% MoM), marking the third consecutive month where prices fell on an annual basis (down 2.7% YoY in December 2022, and down 2.1% YoY in November 2022). 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 on 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, according to Adobe data.

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 comes as the category has seen persistent inflation for 26 consecutive months.

“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, VP 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, e-commerce will be an important battleground this year as brands seek to retain customers and drive experience-led growth.” 

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.

For more information on the Adobe DPI, click here.