Cost of living large soars for the rich as new luxury goods inflation index shows price of oysters, Aga ovens, school fees and tickets for the opera are on the rise
- Private bank Coutts has come up with its own inflation rate for the super rich
- It focuses on ‘luxury basket of goods’ including private schools and oysters
- Other examples include bespoke suits, fine wines, truffles and Aston Martin cars
- The inflation rate for the wealthiest 1% is 5.9% compared to official 2.4% CPI
Inflation is hitting the wealthiest people in Britain twice as hard as the rest of the country according to private bank Coutts.
The firm, which only accepts clients with more than £1million in investable assets, said the richest one per cent are shelling out more and more for luxury goods and services including oysters, fine wines and private schools.
Inflation is officially measured by government via the consumer price index (CPI), with a ‘basket of goods’ used to show what we are spending money on and how much prices are changing.
Coutts, which has served the Royal Family since George IV, has come up with its own ‘luxury basket’ report to reflect what its more wealthy customers are paying for, creating the Coutts Luxury Price Index (CPLI).
Coutts Bank has come up with a rate of inflation for Britain’s wealthiest people identifying how much the price of luxury goods has increased in the past year. A Samsung Galaxy S9, left, has increased by around 6.9% to £699 while a Patek Philippe Calatrava Watch in yellow gold costs £20,000, although the price has only increased by 0.2%
A box of 10 Montecristo No. 2 cigars, pictured right, is a costly £217, but it is one of the few luxury items to stay the same price. Meanwhile a bespoke Kilgour suit has gone up by 1.8% to £4,200. Pictured left is an off-the-rack suit jacket from Kilgour
A four-door AGA oven, pictured, now costs £13,000, a rise of around 4% since 2017, while a 275g tin of Charbonnel & Walker truffles, right, costs £27, a smaller increase of 0.2%
A box in the circle at the Glyndebourne Festival Opera in East Sussex, pictured, has gone up in price by around 2% to £210
Luckily for those buying Aston Martin DB 11s, pictured, which cost £145,000, there has been no rise in price in the past year
The bank found the price of the luxury basket has risen by 5.9 per cent over the past year, more than double the CPI basket, which has only gone up by 2.4 per cent.
Coutts said it created the basket because the official version does not reflect what its customers are spending money on, for example replacing the cost of a ‘t-shirt and jeans from Topman’ that may appear in the CPI version with the cost of a ‘bespoke Kilgour suit’.
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The report said: ‘The UK’s official measure of inflation – the consumer price index – does not capture the changing prices of the luxury goods and services that can form a large part of our clients’ expenditures.
‘Therefore, we decided to use our unparalleled insight into the spending habits of our clients to create the Coutts Luxury Price Index.
The cost of a junior suite at the Gstaad Palace Hotel, pictured, in Switzerland has risen by around 8.9% to £1,500 per night
Preventicum Ultimate Check-ups, pictured at the London-based private health clinic, which include X-rays, MRI and heart scans and other organ checks will set someone back £4,000, up in price by 11.1%
The CPLI basket of around 150 products includes a £145,000 Aston Martin DB11, a £20,000 Patek Philippe Calatrava yellow gold watch and Charbonnel & Walker truffles.
It was calculated by analysing £1.5billion of data from debit and credit card transactions, bank transfers and cheques.
The report added: ‘Meanwhile, the basket was influenced by our bankers’ years of expertise in advising wealthy individuals, and ratified by careful inspection of our client spending.
Only the best: How the price of luxury items has increased
Charbonnel & Walker Truffles, 275g: £27 (0.2% rise)
Montecristo No.2 Cigars, box of 10: £217 (no change)
Kilgour bespoke suit: £4,200 (1.8%)
Prime Scottish housing: £500,000-£2m (2%)
Four-door AGA oven: £13,000 (4%)
Preventicum Ultimate Check-up: £4,000 (11.1%)
Aston Martin DB 11: £145,000 (no change)
Samsung Galaxy S9: £699 (6.9%)
Glyndebourne Festival Opera Circle Box seat: £210 (2%)
Harrow School annual fees: £38,550 (3.9%)
Gstaad Palace Hotel, junior suite: £1,500 (8.9%)
Patek Philippe Calatrava Watch in yellow gold: £20,000 (0.2%)
Dinner at The Fat Duck: £325 (22%)
iPhone XS: £1,450 (26%)
‘We then tracked the changing prices of these items, and combined them with weights to give the inflation rates for each category, and an overall figure.’
The report reveals that the price of a private education – including nurseries, private school fees and tutoring – rose by 4.3 per cent over the past year.
Private secondary school fees are 185 per cent higher than they were 20 years ago and more than 50 per cent higher than in 2008, according to data from the Independent Schools Council.
The commission says one term at a private senior boarding school now costs £11,228 on average, up from £7,353 in 2008 and £3,939 in 1998. The equivalent price per term for a non-boarding private school is £4,618.
The report added: ‘International demand for a British education, rising staff costs and increased investment in facilities are among the reasons behind the rises.’
Meanwhile nights out are also becoming more costly, with the price of dinner at Heston Blumenthal’s three Michelin star The Fat Duck increasing from £265 to £325.
The report added: ‘However, when one considers that the 40-cover restaurant employs around 30 chefs and 50 other members of staff, the costs seem rather more palatable.’
Food costs are also on the rise, with the price of native oysters up 21 per cent due to the increase of demand in China and the destruction of their natural habitat, with around 85 per cent of the world’s oyster beds lost to pollution, disease and fishing.
High-end alcohol has also become more pricey with fine wines rising by an average of 11 per cent while whiskys have soared in price at an average increase of 26 per cent.
Phones are not exempt either, with Apple’s iPhone XS Max costing £1,450 this year, compared to the £1,150 iPhone X released in 2017, an increase of 26 per cent, with the firm justifying the rise because of the product’s upgrades including a better camera and increased battery life.
Prime housing costs are also rising, with properties priced between £500,000 and £2million in Scotland going up by an average of 2%
But those sending their children to private school are paying more. Pictured is Harrow School in north London where annual fees are now £38,550, a rise of around 3.9%
A night out at Heston Blumenthal’s The Fat Duck, pictured, in Berkshire now costs £325 compared to £265 last year
Oysters, pictured, have increased in price by an average of 21% due to loss of habitat and rising demand in China. File photo
Mohammad Syed, Head of Asset Management at Coutts, said: ‘If you’re putting money aside to help realise a long-term goal, such as paying school fees for your children or grandchildren, or helping them buy a property, the harsh truth is that the current interest you get from a savings account can’t keep up with inflation.
‘While keeping your cash in such an account has advantages – easy access to your money and greater security – it may be beneficial to investigate other options like a long-term, diversified investment strategy.’
The report concluded that there is an ‘inadequacy’ in value for money.
It said: ‘Luxury price inflation remains well above mainstream inflation – and for people who purchase such goods and services, this means the real value of their cash will be eroded far faster than CPI inflation would suggest.’
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