According to the Stonehage Affluent Luxury Living Index, the price of luxury goods and services typically bought by UHNW families in London declined by 1.6 per cent in the year to April 2012
The never-ending euro-crisis may have the wealthy anxiously calling their wealth managers, but they can take comfort in this at least: it’s getting cheaper to live expensively in London. According to the Stonehage Affluent Luxury Living Index, the price of luxury goods and services typically bought by UHNW families in London declined by 1.6 per cent in the year to April 2012.
This is a marked contrast to last year, when the ‘cost of being rich’ — to use Stonehage’s terminology — increased by 6 per cent, and means that UHNWs fared better than ordinary shoppers, who faced a 3 per cent increase in consumer prices.
While the Consumer Price Index tracks the change in cost of a basket of goods thought to typify the spending over the average consumer — this year baby wipes, pineapples and tablet computers were all added to the list – SALLI tracks the price of a basket (although it’s best to think of it as a Fortnum & Mason picnic hamper) of high-end goods and services.
In place of ‘foam sweets’ and ‘fried chicken outlets’ found in the CPI basket, SALLI tracks the price of foie gras, caviar and dinner at Hakkasan. Leisure activities include grouse and pheasant shooting and yacht charter; Botox treatments and Soho House membership feature on the list.
While the price of rented property in Kensington and Chelsea rose by 5 per cent, this was offset by impressive falls of 35 per cent in the price of caviar, 19 per cent in the price of fine wines and a 10 per cent decrease in the cost of luxury watches.
The price of sports and recreation also fell by 4.5 per cent, as the London Olympics reduced the cost of Wimbledon hospitality prices by 20 per cent and because of corporate caution around hospitality budgets following the Bribery Act.
Ronnie Armist, executive director at Stonehage Investment Partners said that the eurozone crisis has played a large part in the declining cost of living for HNWs: ‘The decrease in SALLI shows that consumer confidence has fallen, following a period of intense upheaval in the eurozone. This has been further supported by the strength of the pound against the euro. It’s therefore become cheaper for the wealthy to buy the products and services on which they spend their discretionary income.’
So, for the wealthy at least, even the clouds darkening over the eurozone offer a silver lining.