Merchandise shortages, strong demand, and smaller holiday discounts kept U.S. e-commerce prices high in November, pushing the year-over-year inflation rate for the month to a record high of 3.5%, according to the latest Adobe Digital Price Index.
But demand for online purchases also remains at record levels, as out-of-stock messages also spiked during the month.
U.S. 0nline shoppers received 3 billion out of stock messages in November, up from 2 billion in October, Adobe reported.
The Adobe data shows the shortages and supply chain challenges that have been driving up online prices most likely will persist into next year.
This latest inflationary increase occurred during a time of year when consumers used to be able to count on paying less for online purchases than they had the year before.
“What we would see pre-pandemic was deflation and prices decreasing throughout the course of the year, and then when the holiday season hit the prices would drive down even further,” said Vivek Pandya, lead analyst, Adobe Digital Insights.
“All that’s kind of been turned on its head,” Pandya said.
Categories with the biggest year-over-year increases were apparel, up 17.3%; flowers and related gifts, up 15.48%; tools and home improvement, up 6.93%; sporting goods, 6.75%; medical equipment & supplies, up 5.71%; appliances, up 4%; and groceries, up 3.9%.
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Electronics were down 0.4% compared to November 2020, but decline is far smaller than the typical price drop in that category. Historically, according to Adobe, the average price drop, year-over-year, for electronics was 9.06%.
In comparison to the previous month, November prices were down 2%, reflecting the impact of Black Friday and Cyber Monday discounting.
But the discounting wasn’t deep enough to drive November prices below last year’s levels.
“Even though some of that discounting was able to help prices not tick up too much further over October, you can see the magnitude of price increase when you look at it over the year, and see the journey of where prices have moved,” Pandya said.
Holiday discounting in November was weaker than expected, Pandya said, in the range of 5-25%. In previous years discounts typically were in the range of 10-30%.
Toys were the only category where price drops were bigger this Cyber Monday than last years, with discounts averaging 22% compared to 19% in 2021.
Adobe expects the online inflation will persist through early 2022, at least. “As long as there are persisting factors that are affecting the online ecosphere, those prices will stay elevated,” Pandya said.
The Adobe Digital Price Index is based on data drawn from one trillion visits to retail sites and over 100 million products in 18 categories.
Adobe is forecasting that Americans will spend a record-breaking $207 billion online this holiday season, despite shortages and supply chain challenges. In November they spent $114 billion online, up 13.6% from November 2020.