In case you hadn’t noticed, things are a little bit more expensive now than they were a year ago — or even just one month ago.
Numbers for the most recent Consumer Price Index found that the cost of key staples and services was up by 0.4% overall.
This means that the 12-month inflation rate was 2.9%, which is at the higher end of analysts’ forecasts. Most predicted the report coming in between 0.3% and 2.9%.
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In other words, the cost of many core goods and services rose by just shy of 3% between December 2023 and December 2024. And many consumers are feeling that rise.
Here’s a breakdown of how some specific consumer goods changed in price from November 2024 to December 2024:
Food: up 0.3%Energy: up 2.6%Gasoline: up 4.4%New cars: up 0.5%Used cars: up 1.2%Apparel: up 0.1%Shelter: up 0.3%Transportation: up 0.5%Medical care: up 0.2%Medical Care Commodities: 0.0%
Notably, everything was up over the month, with the exception of medical care commodities, which remained flat.
“The airline fares index rose 3.9 percent in December, after rising 0.4 percent in the previous month. The index for used cars and trucks rose 1.2 percent over the month and the index for new vehicles increased 0.5 percent,” the CPI found.
“Other indexes that increased in December include motor vehicle insurance, recreation, apparel, and education,” per CPI information.
Louis Vuitton is one of the most popular luxury brands but its CEO is warning that consumers are cutting back on non-essential spending.
Consumers are seeking deals
Many retailers are finding that customers are being more choosey with their purchases. They may still be shopping at the same rate, but adding fewer items to their baskets or putting off larger purchases.
“Customers are putting fewer items in their baskets but shopping more frequently,” Walmart Chief Financial Officer John Rainey recently told investors, adding that pricier products, like “electronics, TVs and computers have been a tougher sell.”
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Target tells a similar story. It saw record sales during its 2024 holiday season, where many popular items are at their lowest prices of the year.
“Consumers tell us their budgets are being stretched,” CEO Brian Cornell said during a recent earnings call. “They’re becoming resourceful, focusing on deals, then stocking up when they find them. Consumers allow themselves to splurge a little bit when they find the right item.”
LVMH CEO warns investors
Since more customers are wary about price hikes, it’s understandable that they’d be especially resistant to paying more for non-essential, luxury items.
LVMH (LVMHF) CEO Bernard Arnault confirmed as much during the company’s third quarter earnings call.
“Today, I’m not going to report record revenue,” he told analysts on the call, reporting that net profit was down 17%. Revenue was down 2% year over year.
“Customers are increasingly aware of the value of the product, beyond the price, if you will,” Arnault said.
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He added that, since shoppers are increasingly price-conscious, a brand must justify their reasoning for a price hike beyond needing to boost profits.
“…[A] number of houses have, unfortunately —again, not all — but some have increased their prices in a somewhat extravagant manner without really giving any justification or having any justification to provide,” Arnault explained. “I mean, pushing prices up 15% just doesn’t make sense if there’s no change in the product. And if that happens, then the clients just wonder what’s happening and why they’re being taken for a ride. You have to be realistic.”
But LVMH sees this as an opportunity.
“In 2025, amid a global environment characterized by wide-ranging geopolitical and economic uncertainty, the Group will focus on growing its market share,” the company wrote.
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