Young man unpacking boxes of food at home
Online prices for groceries were up by a record amount, on an annual comparison, in May, while prices in other categories declined, as Americans curbed discretionary spending due to inflation, according to data from Adobe
Grocery prices were up 11.7% year-over-year in May, outpacing the previous records for annual increases set in April, March, and February of this year, data from the latest Adobe Digital Price Index shows.
U.S. consumers spent $78.8 billion online in May, according to Adobe. That is 7.1% more than they spent in May, 2021, and $1 billion more than the $77.8 billion spent online in April. So far this year consumers have spent $377.6 billion online, up 8.9% compared to the same period in 2021.
Overall, online prices were up 2% year-over-year in May, but down 0.7% month-over-month compared to April. The year-over-year increase in May was well below the 2.9% annual increase in April and the record 3.6% annual increase in March.
Dialing back discretionary spending
The numbers show that “an uncertain economic climate and rising costs in core areas like groceries” are curbing online spending in some categories, Patrick Brown, vice president of growth marketing and insights at Adobe, said. “Slower consumer spending on discretionary items has driven slower, single digit ecommerce growth since March, and this pullback mirrors the easing in online inflation,” Brown said in announcing the May numbers.
A survey released this week by consumer research platform Attest found that 84.2% of consumers said they are cutting back on purchases due to rising costs. The cost of food was the biggest concern of those surveyed, followed by gas and electricity, and rent or mortgage payments, according to Attest.
Those spending cutbacks will have “very real ramifications for brands of all types, but especially for those in the premium, travel or entertainment sectors, Jeremy King, CEO and founder of Attest said. Half of U.S. consumers are cutting back on non-essentials like clothes and meals out, while more than one-third who previously were in the market for luxury purchases now are reducing those purchases, according to Attest.
Consumer cutbacks appear to be slowing the online price increases that hit record levels during the pandemic.
Ten of the 18 product categories tracked by the Adobe Digital Price Index saw month-over-month price drops compared to April, while eight saw increases.
Twelve of the 18 categories had year-over-year price increases in May. while six had year-over-year declines.
May was the first month when groceries had the largest year-over-year price jump of any of the categories, beating apparel for the first time, according to Adobe. Apparel prices were up 9% year-over-year, compared to 11.7% for groceries.
Toys, electronics down 6.5%
Toys had a year-over-year price drop of 6.5%, the largest annual decrease since December 2019, when that category was down 10% year-over-year due to holiday sales promotions.
Electronics prices also were down 6.5%, year-over-year, the largest annual drop in that category since May 2020, when they declined by 6.8%. Because electronics are the largest category in ecommerce, price movements in electronics “have an outsized impact on overall inflation online,” Adobe reported.
The Digital Price Index is based on one trillion visits to retail sites covering over 100 million SKUs across 18 product categories.
Leave a Reply