IDEX Online Research: Jewelry Supplier Inflation Moderates on Month-to-Month Basis
June 28, 11(IDEX Online News) – For the month of May 2011, jewelry supplier prices rose by a robust 11.3% from the same month a year ago. On a month-to-month basis, supplier jewelry price inflation was up by just 0.2%, after a very modest decline in April.
Monthly swings are less meaningful, but may give an indication of the strength – or weakness – of the underlying factors that affect jewelry suppliers’ prices.
May’s jewelry supplier price inflation rate of 11.3% was substantially above the average jewelry supplier inflation rate of 9.3% for the full year 2010, and it was multiples above 2009’s supplier inflation rate of 3.3%.
The graph below summarizes year-over-year jewelry supplier price inflation on a monthly basis.
Source: BLS |
Higher Precious Metal Prices Continued to Drive Inflation Pace
Jewelry suppliers’ prices of precious metals jewelry rose by 12.8% during May 2011 versus the same month a year ago. This was slightly above jewelry suppliers’ overall inflation rate for all jewelry and watches of 11.3% for the month, but was notably down from prior months’ mid-teen inflation rate.
On a month-over-month basis, jewelry suppliers’ prices for precious metal jewelry reflected inflation of 0.9% in May versus April. On an annualized basis, this would suggest that suppliers’ jewelry prices could rise by 10-11% or so.
The graph below compares the jewelry supplier inflation rate for precious metals jewelry (gold column) versus the overall jewelry supplier inflation rate for jewelry. These comparisons are year-to-year.
Source: BLS |
Watch Price Inflation Rises At Supplier Level For Second Consecutive Month in May
For the second consecutive month, watch prices at the supplier level showed a gain of 2.2%, when compared to May 2010. This level of inflation is reminiscent of inflation trends in 2009 and early 2010, when watch prices rose by a low single-digit level at the supplier level. However, in October 2010, watch price inflation suddenly disappeared, on a year-to-year basis, and was nearly non-existent for six months.
On a month-to-month basis, May versus April, supplier prices of watches declined by 0.5%.
The graph below shows year-to-year supplier price inflation for watches for the past twenty-four months. After spiking in early 2009, watch price inflation at the supplier level has steadily declined.
While overall jewelry demand is stronger, watch demand – with the exception of Rolex and a select few other premium brands – remains relatively tepid. Young consumers apparently would rather refer to their mobile phones to get the correct time versus wearing a watch on their wrist.
Source: BLS |
Jewelry Retail Prices Show Strong Gains in May 2011
Jewelry retail prices have been climbing steadily since November 2010, driven by both stronger consumer demand and higher supplier prices.
For the month of May 2011, retail jewelry prices – all categories of merchandise – rose by 7.4% over May 2010. This was one of the larger increases in inflation since the summer of 2008, just before the “Great Recession” hit with a vengeance in the 2008 holiday selling season.
On a month-to-month basis, retail jewelry prices fell by 0.4%, when comparing May 2011 to April 2011. Prior to this modest price slippage in May, jewelers had been able to hold prices relatively steady since the important Valentine’s Day selling period in February.
The graph below summarizes year-to-year retail jewelry price inflation in the U.S. market.
Source: BLS |
Watch Prices Show Increased Inflation
Retail and supplier prices of watches have tended to move together, with prices more or less flattish, both on a month-to-month basis and a year-to-year basis, over the past few years.
For the month of May 2011, retail watch prices rose by 1.1% from May 2010. That’s the same level as last month’s inflation rate of +1.1%, and was well below historic levels. When compared to the prior month April 2011, watch prices in May were down by 0.5%. Both of these figures were well below suppliers’ watch price inflation for the month.
Retail prices of jewelry, excluding watches, posted a sharp increase in May 2011. When compared to May 2010 prices, jewelry retail prices were up by 8.4%, one of the larger gains since mid-year 2008. When compared to April 2011, retail prices of jewelry rose by 0.9%.
The graph below compares the inflation rate for jewelry and watches (green bars), jewelry only (red bars), and watches (gold bars).
Source: BLS |
Components of Inflation Suggest Prices Will Rise
Polished diamond prices are rising sharply, gold prices continue to rise, while silver prices slipped in May and platinum prices are holding steady.
| Source: Kitco |
Source: Kitco | Source: Kitco |
The table below provides a detailed summary of the factors affecting jewelry price inflation throughout the distribution pipeline.
Source: Various Markets |