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Should Luxury Brands Raise Prices?

Growing income and wealth inequality have allowed European luxury brands to raise prices at about double the rate of other consumer goods categories. But some brands are better positioned to hike prices than others, writes Luca Solca.
Hermès Birkin bag | Source: Getty Images
By
  • Luca Solca
BoF PROFESSIONAL

Prices of European luxury goods increase at about two times the broader consumer price index (CPI), which measures changes to the price of a standard basket of consumer goods and services. This is confirmed by both analyses of specific product SKUs over 40 years as well as analyses of broad-based baskets of luxury goods and services, such as the Cost of Living Extremely Well Index produced by Forbes. While the broader CPI grew at around 3 percent CAGR over the past 40 years, the Cost of Living Extremely Well Index increased at 5 percent annually.

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