There has been practically no inflation at the jewelry producer level, from starting of the year, as calculated by the Jewelry Producer Price Inflation Index. Due to this, price inflation at the retail level, as calculated by the Jewelry Consumer Price Inflation, has prolonged to diminish.
There are many reasons that jewelry price inflation has declined, both at the retail level and also at the producer level. Few of them are:
- Demand for jewelry at the consumer end continued to be weak. Many specialty jewelers are declaring that sales are running at nearly 85 percent of last year’s levels. At this rate, they are not replacing stock, except for the quick selling pieces.
- No supplier, particularly at the supplier and wholesale level, has pricing power. Even at the diamond mining level, where there are just a few suppliers, prices are increasing and decreasing, influenced by buyers demand instead of some artificial vehicle.
- In early 2008, several retail specialty jewelers increased their prices to match with much higher commodities prices. Valuable metal and diamond prices climbed in 2007 and early 2008, making all players in the pipeline to increase prices.
While there has been some stabilizing and limited increase in commodities prices, they have not started to increase as much as forecasters’ models predict, seeming that they follow the historical model increasing on expectations of an economic recovery. But, it is supposed that it will be only for a matter of time or for short time before commodities prices start to increase extremely, particularly as it becomes clear that the current recessionary environment is declining.