Evidence is emerging of luxury brands responding to ever-greater levels of consumer disillusionment over prices. Specifically, data from UBS has shown that the cost of luxury goods went up by an average of just 3% between January and May 2025 – the gentlest such rise since 2019. 

This period of the year typically accounts for the bulk of yearly price increases, which brands tend to implement during the first quarter as budgets are set. 

The latest disclosed figure is quite the comedown from the peak of 8% seen in 2022, although it does continue a longer-term trend of slowing price increases. Last year, for example, saw a mere 4% annual change in the price of luxury goods. 

It’s a major turnaround from the early 2020s 

The situation was so different in the post-pandemic boom period of just a few years ago. Back then, prestige brands took the opportunity presented by strong demand for luxury handbags, clothes, and jewellery to hike their prices significantly. 

Fast-forward to 2025, however, and as reported by the Financial Times, even wealthy clients who can weather such price increases are putting up greater resistance to them. 

In the words of a luxury executive quoted by the newspaper: “Just because top-tier clients can afford it doesn’t mean they don’t notice higher prices. Nobody wants to feel like they are being taken advantage of.” 

Meanwhile, for some of the more “aspirational” consumers who helped spur on the fruitful period enjoyed by luxury brands during the earlier part of this decade, certain high-end items have gone beyond their budget. 

The recent more modest price increases, then, indicate the luxury sector could be returning to the levels of yearly inflation – around 1% to 2% – typical of the pre-pandemic years. 

A “clear strategic pivot” for brands facing “persistent macroeconomic headwinds” 

The leader of Bain & Company’s Luxury Goods vertical, Claudia D’Arpizio, described the price slowdown as a “clear strategic pivot” by brands, which she said were “responding to intensifying consumer price fatigue, persistent macroeconomic headwinds, and a perceptible softening in consumer enthusiasm.” 

She further explained: “A more measured approach to pricing reflects an effort to defend volume while building resilience against looming risks, such as potential tariff shocks.” 

The scale of the challenges facing luxury brands was aptly illustrated by market leader LVMH reporting a disappointing first half of 2025, during which revenues slipped by 4% and net profits recorded a 22% decline. 

The combined impacts of ongoing United States tariff uncertainty and multiple conflicts across the globe are hampering the luxury sector’s efforts to recover. 

On the plus side, however, Citi analyst Thomas Chauvet has said he foresees “catch-up opportunities” over multiple years for brands that did not push up their prices so aggressively during the boom times. 

Your brand doesn’t have to be a bystander in this fast-moving era  

Is your lifestyle or fashion brand looking to position itself to not only endure the present storm, but also capitalise on the opportunities that could arise from it? 

If so, please don’t hesitate to have a conversation with the UK-based, but globally minded team of experts at our specialist digital marketing agency for luxury brands, Skywire London. 

We would be pleased to discuss the possibilities with you for how we can support your business’s sustainable and durable growth through the delivery of strategic and digital excellence. 

Photo by Christian Wiediger on Unsplash