Rising consumer goods prices - statistics & facts

In the consumer goods sector, while the impact of the rising prices of essential items is felt more immediately, and as a result puts more pressure on consumers, durable goods such as furniture, appliances and consumer electronics, and semi-durable goods such as clothing and footwear are quietly getting more expensive as well. In the United States, housekeeping supplies, such as cleaning and paper products increased by 10.7 percent in price compared to the same month in the previous year. In the European Union (EU), furniture and household equipment prices increased by 7.3 percent in June 2022.

Why are furniture prices rising?

A perfect storm of rising transport costs in international trade, increased energy costs facing the manufacturing sector, lingering supply chain issues caused by the coronavirus (COVID-19) pandemic, and global events are the contributing elements to the rising furniture prices. In the United States, where almost 40 percent of furniture imports come from China, the annual average Consumer Price Index (CPI) for furniture and bedding saw a steep increase in 2021, and continued climbing rapidly in the first months of 2022. In the UK, price changes in the furniture sector have provided increasing contributions to the 12-month inflation rate since April 2021. In the most recently reported period, the furniture sector accounted for 0.59 percent of the overall inflation rate in the country. For comparison, this share was 0.35 percent for clothing items.

Russia’s war on Ukraine had implications for the furniture industry too, particularly in Europe. Russia, Belarus, and Ukraine are suppliers of raw materials used in the manufacturing of furniture, such as wood. These countries are among the leading suppliers of wood for Poland, the world’s second largest exporter of furniture. In addition to its domestic supply, while Poland sources raw materials for furniture from elsewhere in the EU too, such as Slovakia, Czechia, and Sweden. As a result, furniture might be one of the industries to see disruptions due to the ongoing situation, and boycotts of Russia and Belarus.

Retailers are feeling the impact of inflation

Consumers in the leading economies of the world have already had to adjust to the new reality of increasing living costs and rising prices of food and other necessities. Many consumers are either purchasing less or looking for cheaper, discounted options at supermarkets. This change in consumption behavior, coupled with transportation and energy costs of keeping shelves well-stocked in a timely manner, has hit retailers’ profits. In late July, the world’s leading retailer Walmart has announced a decline in its projected operating income forecast for Q2 and the full financial year of 2023. Despite expecting growth in sales, the retailer’s operating income outlook is bleaker compared to the company’s previously consistent income streak. Many economic commentators see the profit statement issued by Walmart as a warning for the rest of the retail industry in the face of inflation and the upcoming possible recession.

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