Demand for luxury items dips as wealthy shoppers start to feel pain of rising inflation

Kristen Walters

Regular consumers aren't the only ones suffering from the recent rise in costs. Studies show that more "affluent" shoppers have also had to start scaling back on luxury goods to combat the effects of rapid inflation.

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Inflation in the US soared nearly 8 percent in the last year to reach a 40 year high, and it shows no signs of slowing down anytime soon.

The effects of inflation have resulted in higher prices at the grocery store, rising fuel and utility costs, and breathtaking increases in housing. Yet, thus far, the brunt of these inflationary increases has been carried by the millions of "ordinary" consumers in the lower and middle classes.

However, regular folks are not the only ones who have been forced to take a look at their spending habits and scale back on their budgets. A new report revealed that even the upper middle class and more affluent shoppers in the higher income brackets are feeling the pinch of rising costs.

According to one report, the luxury furniture company, Restoration Hardware, reported that its earnings were down for the first quarter of 2022. Apparently, there is less demand for sofas that cost $12,195 when the cost of living starts to soar and there is massive volatility in the market due to rising interest rates and complex international political conflicts.

Other luxury brands that cater to weather clientele have expressed concern over declining demand for their products. However, many of these companies are in an excellent position to weather the economic storm. Unlike discount and "bargain" brands which operate on very thin profitability margins, luxury brands are able to maintain more significant margins by keeping prices high.

Additionally, economic analysts believe that if international travel begins to pick up, you'll see an uptick in luxury goods sales once again.

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