Jewelry supplier prices edged down month-over-month in July 2011, even as retail prices hit record highs, according to new U.S. government data. For overseas buyers sourcing rings, necklaces, and other fine jewelry, the data signals that manufacturers absorbed some raw-material cost increases rather than passing them fully downstream, a trend worth monitoring for pricing negotiations.
Retail price surge
Retail jewelry prices jumped 10.6% year-over-year in July, the second-largest monthly increase since the Jewelry Consumer Price Index began in 1987. The sharp rise partly reflects a deflationary base effect from July 2010. For importers and distributors, this suggests that end-consumer demand remains strong enough to support higher price points, particularly in bridal and gold-based categories.
Supplier price trends
Suppliers' jewelry prices soared 14.6% year-over-year in July, one of the largest gains in over 30 years, driven almost entirely by rising gold and precious metal costs. However, compared to June 2011, the Jewelry Producer Price Index slipped slightly. For the seven months through July, supplier prices rose 12.6% on average, well above 2009 and 2010 annual rates.
What buyers should watch
Despite double-digit year-over-year inflation, the month-over-month moderation suggests suppliers absorbed some commodity cost increases rather than passing them all to buyers. Retailer push-back on high prices may also be a factor. For private-label brands and trading companies, this creates a potential window to negotiate more favorable terms on sterling silver, gold-plated brass, and gemstone jewelry orders before raw-material costs fully flow through.
Key cost drivers
Two factors drove July's high inflation: precious metals prices (gold up 32% year-over-year, platinum up 15%, silver up 111%) and polished diamond prices (up 25% per the IDEX Online Global Polished Diamond Price Index). For OEM/ODM buyers of diamond rings, earrings, and bridal sets, these input costs remain critical to pricing models.
Compliance and logistics signals
As long as consumer demand stays robust in the U.S., Europe, and emerging markets like Asia and India, precious metal and gemstone prices are expected to remain elevated. Temporary inflation from gold's role as a financial hedge may persist. Importers should factor continued cost pressure into 2022 sourcing budgets and consider hedging strategies for gold and silver content in jewelry shipments.
Source: Read the original report | Published: August 29, 2011