Inflation Lower for Luxury Goods

April 10, 2000

Inflation Lower for Luxury Goods

Low inflation benefits everyone, but consumers of luxury goods enjoyed lower-than-average inflation rates in 1999 – 2.35% vs. a 2.7% increase in the Consumer Price Index – according to a survey by champagne maker Moët & Chandon. That's also less than the 3.9% increase in the 1998 M&C survey.

Released annually, the survey tracks the cost of a dozen essentials of the privileged lifestyle in New York City. In 1999, prices for seven of the exclusive luxury goods and services rose, while four were stable and one fell. Experiencing increases were tickets on the Air France Concorde (6.1%); limousine rental (4%); a wash, cut and blow dry at Frédéric Fekkai (11%); a Porsche automobile (0.6%); a matched set of Louis Vuitton luggage (5.8%); a case of Moët & Chandon champagne (7.5%, for the 1993 vintage only) and a pound of upscale chocolates (2%). Broadway theatre tickets, caviar, cognac and a live-in butler's annual salary remained the same. A Jaeger-LeCoultre Men's Reverso watch fell 8.8% to $18,050.

The economic situation is favorable for the luxury market, says Kevin Bannon, executive vice president and chief investment officer for the Bank of New York. "The stock market has been up 20% a year, home values are skyrocketing and the outlook for continued economic expansion is good," he says. "The result is a wealth effect that boosts consumers confidence and encourages them to indulge themselves in the finer things in life. That's great news for luxury goods."

- by Mark E. Dixon