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Ecommerce growth and online inflation slowed in April, according to the latest Adobe

ADBE
Digital Price Index report, a sign that Americans are shifting their online spending as they react to price increases and the return to in-person experiences.

Consumers spent $77.8 billion online in April, down $5.28 billion from $83.08 billion in March, a month-over-month drop of 6.8%. While April spending was up 4.5% compared to April 2021, that increase was far smaller than the double-digit year-over-year growth reported in January and February. In January spending was up 12.3% year over year, and in Februrary it rose by 15.5% compared to February, 2021.

The 4.5% year-over-year growth in April is well below the approximately 10-12% year-over-year gains typically recorded each month before the pandemic.

Rising interest rates and persistent inflation apparently have caused consumers to pull back on spending for durable goods, according to the Adobe report, released today.

Spending shifts to fuel, travel

“You’re seeing the surging levels of demand that we’ve been seeing for almost a couple of years start to draw down,” Vivek Pandya, lead analyst for Adobe Digital Insights said.

A confluence of factors is causing that, Pandya said. “You have consumers who’ve been spending on durables, things like electronics, pretty heavily, and over-indexing on their spending, and now as they’re having to contend with higher fuel prices, higher flight prices, travel, which they’re looking to do more of, that’s cutting into their budget,” he said.

“As the cost of borrowing and economic uncertainty rises for consumers, we are beginning to see the early impact on both online inflation and spend,” Patrick Brown, vice-president of growth marketing and insights at Adobe, said, in releasing the April numbers.

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But, Brown noted, the fact that Americans still spent more than $77 billion online in April shows that while the pace of growth has slowed from the record-breaking levels during the start of the pandemic, post-pandemic demand for online shopping remains strong.

“Consumers continue to embrace the ease of online shopping and more personalized customer experiences in the digital economy,” he said.

Online prices were 0.5% lower in April than in March, but were 2.9% higher on a yearly basis compared to April 2021. That year-over-year increase was down significantly from the record 3.6% year-over-year price increase in March.

According to Adobe, the April numbers indicate that online inflation, with prices up year-over-year for 23 consecutive months, may be slowing down. More than half of the 18 categories tracked by the Adobe index showed month-over-month price decreases in April.

Online grocery prices up 10.3%

Groceries and pet products are two categories where demand, and prices, continue to grow online. Both had record year-over-year price increases in April, with grocery prices up 10.3% and pet products up 8%.

Shopping online for groceries and pet goods became a habit for many Americans during the pandemic and they appear to be sticking with that habit.

“You’re still seeing a decent level of momentum and spending on groceries, which is keeping those prices pretty elevated,” Pandya said.

Electronic prices were down 5.2% year-over-year in April, the largest year-over-year drop for the category since November 2020. Computer prices were down 5.7% year-over-year in April , the 16th consecutive month of deflation in that category.

Apparel prices were up 12.3% year-over-year, but online inflation in that category appears to be easing, according to Adobe. From November 2021 to March 2022, apparel prices increased by more than 15.5% each month, on a year-over-year comparison.

Adobe’s Digital Price index is based on Adobe Analytics data from one trillion visits to retail ecommerce sites, covering over 100 million SKUs across 18 product categories.

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