Adobe announced that its Digital Price Index (DPI*) showed that online prices in May increased 2 percent year-over-year, down from 2.9 percent year-over-year in April and the record 3.6 percent year-over-year increase in March, while decreasing 0.7 percent month-over-month.

Most categories tracked by Adobe’s DPI (10 out of 18) saw month-over-month price decreases in May.

Prices for electronics and apparel, major categories that made up 33 percent of e-commerce spending in 2021, have continued to draw down. Electronic prices were down 6.5 percent year-over-year (down 1.4 percent month-over-month), a more significant decrease than April (down 5.2 percent year-over-year), and a record year-over-year low for the category over the last 24 months. 

Prices for apparel increased 9 percent year-over-year (down 1.5 percent month-over-month), down from the 12.3 percent year-over-year increase in April. 

Toys were down 6.5 percent year-over-year (down 1.3 percent month-over-month), a record low for the category over the last 24 months. 

Prices have not eased for groceries, rising 11.7 percent year-over-year, up 1.3 percent month-over-month, a record year-over-year high for the category. This is the first month prices for groceries have risen the most of any category, overtaking apparel.

In May, consumers spent $78.8 billion online, representing 7.1 percent year-over-year growth, and over $1 billion more than the month prior when consumers spent $77.8 billion online (4.5 percent year-over-year growth), and below the $83.1 billion (7 percent year-over-year growth) spent in March. In 2022, consumers have spent a total of $377.6 billion online, growing 8.9 percent year-over-year.

“Despite the modest increase in consumer spending online, an uncertain economic climate and rising costs in core areas like groceries are putting a hamper on overall demand,” said Patrick Brown, vice president of growth marketing and insights, Adobe. “Slower consumer spending on discretionary items has driven slower, single-digit e-commerce growth since March, and this pullback mirrors the easing in online inflation.”

“E-commerce data has become an important input for measuring inflation as daily activities, including shopping, become more and more digital,” said economist Marshall Reinsdorf, former senior economist at International Monetary Fund. “In an uncertain economic environment, Adobe’s Digital Price Index is a timely indicator that often mirrors inflation movements happening offline while highlighting the tendency for inflation to be lower in the digital economy.”

The DPI provides a comprehensive view of how much consumers pay for goods online as e-commerce expands to new categories and brands focus on making the digital economy personal. Powered by Adobe Analytics, it analyzes one trillion visits to retail sites and over 100 million SKUs across 18 product categories, including 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 drug and office supplies.

In May, 12 of the 18 categories tracked by the DPI saw year-over-year price increases, with groceries rising the most. Price drops were in six categories: electronics, jewelry, books, toys, computers, and sporting goods.

Eight of the 18 categories in the DPI saw price increases month-over-month. Price drops were across ten categories, including electronics, personal care products, jewelry, books, toys, home/garden, appliances, computers, sporting goods, and apparel.

Notable categories in the DPI for May include:

  • Electronics: Prices were down 6.5 percent year-over-year, down 1.4 percent month-over-month, the largest year-over-year drop for the category since May 2020, when prices were down 6.8 percent year-over-year. As the biggest category in e-commerce by share of spend, price movements have an outsized impact on overall inflation online.
  • Apparel: Prices were up 9 percent year-over-year, down 1.5 percent month-over-month. While the category has now seen 14 months of online inflation, reversing a predictable pattern of heavy discounting periods, there are continued signs that prices are beginning to ease. Prices increased 12.3 percent year-over-year in April, 16.3 percent year-over-year in March and 16.7 percent year-over-year in February.
  • Toys: Prices were down 6.5 percent year-over-year, down 1.3 percent month-over-month, the largest year-over-year drop for the category since December 2019 before the pandemic, when prices were down 10 percent year-over-year during the holiday shopping season; this is also the 14th consecutive month of deflation for the category as prices rose 0.2 percent year-over-year in March 2021.
  • Groceries: Prices continued to surge and rose 11.7 percent year-over-year, up 1.3 percent month-over-month, setting another record on an annual basis; this follows a 10.3 percent year-over-year increase in April, a 9 percent year-over-year increase in March and a 7.6 percent year-over-year increase in February—all record highs; this makes the first month where groceries have risen more than apparel, which had consistently been the top category for over a year. Groceries remain the only category to move in lockstep with the CPI long-term, with online prices rising now for 28 consecutive months.

*The 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. Powered by Adobe Analytics, Adobe uses a combination of Adobe Sensei, Adobe’s AI and machine learning framework, and manual effort to segment the products into the categories defined by the CPI manual.