Living in London gets cheaper for the rich
The price of luxury goods and services in London has fallen by nearly 4%, the first fall in seven years, marking the end of a period of steep inflation of the luxury goods sector.
Prices of a basket of 50 luxury goods decreased 3.7% in the 12 months to April 2009 according to The Stonehage Group, a wealth manager which tracks the prices of high-end goods with its Affluent Luxury Living Index.
The fall compares to an average inflation rate of 2.3% measured by the UK Consumer Price Index over the same period. Stonehage said the deflationary trend is expected to become more apparent in the coming months, as the recession continues to feed through to the costs of high-end goods and services.
However, the fall in prices could actually be more like 30%, said the firm. It said this year’s fall is potentially understated, given that the index uses recommended retail prices. Anecdotal evidence of many of the basket items suggests that pricing has become more flexible with, for example, 30%+ discounts available on many travel and hotel bookings as a result of specific deals or effective pre-visit bartering.
The fall in the value of Sterling against the Euro and the Dollar over the last 12 months has underpinned the prices of imported luxury goods and luxury services outside the UK - without this factor the fall would be much greater, Stonehage said.
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