Ecommerce Inflation Easing, But Shoppers Still Shifting Spending Due To Prices

Online prices declined, on a year-over-year basis, for the seventh consecutive month in March, but persistent inflation in categories like groceries continues to impact discretionary spending on items like electronics, toys, and gifts.

The latest Adobe
ADBE
Digital Price Index, released today, shows online prices declined 1.7% last month, compared to March, 2022, and were flat (up 0.03%) compared to the previous month.

The overall decline in prices, Adobe reported, was driven by sharp drops in discretionary categories. Electronics prices fell 12% year-over-year, while flowers and related gifts were down 24.3%, toys were down 6.6%, and appliances were down 4.9%.

The grocery category, however, continues to show double-digit online inflation, compared to a year ago, although the rate of increase is slowing. Grocery prices were up 10.3% year-over-year, and up 0.4% from February. Grocery inflation, however, has been slowing since September, when prices rose a record 14.3% year-over-year.

Despite that inflation, online grocery shopping remains popular with consumers. Adobe reported last month that the grocery category saw the biggest jump in online sales in 2022, with spending rising 10.8%, to $86.8 billion.

Coresight Research, in a research note released this week, commented that despite inflation, online grocery sales continue to grow, although the pace of expansion is slowing. Consumers are continuing to use the “pandemic-forged” habit of online shopping for non-food grocery categories “to a greater extent” than food, according to Coresight.

Coresight also cited research showing that grocery inflation is boosting foot-traffic at discount grocery stores such as Aldi, and has caused private label brands at Walmart
WMT
, Kroger
KR
and Costco to gain market share.

Adobe’s Digital Price Index analyzes pricing data drawn from one trillion visits to retail sites, and over 100 million SKUs across 18 product categories.

Of those 18 product categories, 10 of them saw price drops, year-over-year, in March, while eight had price increases.

The categories with price decreases, year-over-year, were flowers and related gifts, electronics, appliances, books, toys, computers, furniture and bedding, home and garden, jewelry, and sporting goods.

That categories that showed year-over-year price increases were groceries, apparel, personal care items, office supplies, pet products, non-prescription drugs, tools and home improvement, and medical equipment and supplies.

Apparel prices were up 6.6% year-over-year, an increase from February, when they showed a 5.1% year-over-year increase. But apparel inflation has cooled off significantly from 2021 and 2022, when prices rose 16.6% year-over-year in December 2021, and 15.8% in January, 2022.