Online inflation hits a record high ahead of the holidays
By Matt Egan, CNN Business
Online shopping used to be the one part of the economy where prices would reliably fall. Covid has changed that.
Online prices rose in November for the 18th month in a row, Adobe said Thursday.
And not only is inflation suddenly a force in the e-commerce world — it’s a growing one. Online prices are up by 3.5% from a year ago, the biggest 12-month increase since Adobe began tracking this metric in 2014.
Eleven of the 18 categories that Adobe tracks saw price increases, led by a 17.3% spike for apparel from a year ago. Before Covid, online clothing costs regularly declined, with online apparel prices falling by an average of 1.1% a year between 2015 and 2019, Adobe said.
“Ongoing supply chain constraints and durable consumer demand have underpinned the record high inflation in e-commerce,” Patrick Brown, vice president of growth marketing and insights at Adobe, said in a statement.
Groceries, sporting goods and flowers
Adobe said its Digital Price Index covers more than 100 million products in the United States, from pet products to over-the-counter drugs. Online prices fell by 2% month-over-month due to holiday discounts.
Beyond apparel, Adobe reported significant year-over-year increases on prices for groceries (3.9%), sporting goods (6.8%), home improvement (6.9%) and flowers (15.5%). Online grocery prices have risen 22 months in a row.
The online sticker shock provides yet more evidence of the impact of Covid on the economy. Supply has consistently struggled to keep up with skyrocketing demand. Shortages of workers, components, truck drivers and raw materials have driven costs sharply higher.
Glimmers of hope have emerged on the supply chain front, which could take some pressure off inflation. But it will take time for these complex logistics networks to get healthy.
While online inflation hit a record in November, some categories experienced price cuts. For instance, prices for online toys fell 2.9% from a year ago and 3.6% month-over-month. Adobe said that toys, books and computers are among the only categories to follow the historical pattern of “persistent, stronger deflation” in online shopping.
Given the spike in offline prices, Adobe said it’s still cheaper to shop online for toys, computers, sporting goods and other items.
Although energy prices have finally begun to cool off in recent weeks, investors are bracing for another eye-popping inflation report on Friday from the government. Economists expect consumer prices rose by 6.8% in November, marking an acceleration from already-elevated levels and the biggest 12-month increase since May 1982.
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