Decreasing Apparel Prices Are Helping to ‘Drive Down’ Online Retail Inflation, According to Adobe
Price increases for goods sold online continued to slow in June, according to new data from Adobe released on Tuesday.
In June 2022, online prices increased 0.3% year-over-year, down 1% from May, according to this month’s Adobe Digital Price Index (DPI).
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While this marks the 25th straight month of inflation online, June is the third month where online price increases have slowed. More specifically, seven out of the 18 categories tracked by the DPI saw month-over-month price decreases in June.
Prices for electronics and apparel — major categories that made up 33% of the e-commerce spend in 2021 — have continued to draw down, Adobe reported. Prices for apparel, specifically, decreased 0.10% year-over-year, significantly down compared to the 9.03% year-over-year increase in May. Adobe reported that this marks the largest year-over-year drop for the category since March 2021, when prices were down 3.4% compared to the prior year. “Price decreases in this category are helping drive down online retail inflation overall,” Adobe said in a statement.
Despite continued decreases in apparel, there is still no relief for food and other household essentials. According to Adobe, online grocery prices have not eased, rising 12.44% year-over-year.
In 2022 so far, consumers have spent a total of $451.7 billion online, growing 7.5% year-over-year, Adobe said. In June, consumers spent $74.1 billion online, which represents approximately 1% growth over last year.
This comes just weeks after the Bureau of Economic Analysis released its latest data for May, citing an increase of overall consumer spending by 0.2% for the month. This marks a slowdown from the 0.9% growth in April. The Bureau’s measure of inflation remained unchanged from the last month, with prices in May up 6.3% compared to the same period last year.
Retail sales in May also slowed from the prior month, though were still well above last year’s levels. Retail and food service sales in May 2022 totaled $672.9 billion, marking a seasonally adjusted 0.3% decrease from the previous month and a 8.1% leap from May 2021, the U.S. Census Bureau reported.
At the same time, inflation hit a more than 40-year high in May, with consumer prices up 8.6% compared to the year ago period, according to the Bureau of Labor Statistics’ monthly report. This number was up from 8.3% growth in April and from the 8.5% growth in March.
This persistent inflation has sparked calls from industry leaders on the Biden administration to take measures to alleviate inflation by repealing tariffs on goods from China. President Biden said on Sunday the administration would have “further discussions” before deciding what action to take.
Investment bank Cowen is skeptical of a meaningful positive EPS impact if these tariffs are repealed “given the impacts of supply chain inflation and inventory levels.” This aligns with Commerce Secretary Gina Raimondo’s remarks on Sunday, which conceded that removing US tariffs on Chinese goods would not ease inflation in a “very significant way.”
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