How far will your money go? – Coutts Luxury Price Index

How far will your money go? – Coutts Luxury Price Index

The latest edition of the Coutts Luxury Price Index (CLPI) shows that luxury inflation rose by 2.9% over the past 12 months to May 2019. This compares to the current mainstream inflation figure of 2% as measured by the Consumer Price Index (CPI).

Economic Analysis

20 June 2019

Published twice a year, the CLPI is a Coutts measure of inflation on high-end items and experiences, covering around 150 goods and services across 12 categories.

According to the research, the categories facing fierce inflation over the year to May 2019 include:

• Communication, which sees costs climb by a massive 43.5%
• School fees, up by 5.2%
• Whisky and wine prices, up by 9.5%.

Height: Rate of inflation
Width: Weight within the index
 

 

Other highlights of the report include the cost of a first-class flight which has risen by 22% a year on average since 2016.

The research shows that flying from London to New York cost £4,500 three years ago, but today the same flight sets you back £6,000 – an extra £1,500. 

It also highlights the added price pressures involved with luxury goods and services. While the costs of rare materials and higher levels of service fuel higher price tags to begin with, increasing demand and limited supply are the main drivers of above-inflation price rises.

Coutts head of asset management Mohammad Kamal Syed says one way to try to beat the effects of inflation is to invest as part of a carefully thought-out financial plan.

“The fact is that holding cash in a savings account could cost you dearly,” he says. “You may see it as a safe-haven tactic, but inflation can quietly, constantly corrode the real value of your money when prices rise faster than the interest it makes.

“Investing over the long term, on the other hand, could potentially provide a greater return than a standard savings account and help preserve, or ideally increase, the value of your wealth.”

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