Global Retail Pricing Trends Signal Inflation

This week’s announcement from the U.S. Department of Labor that the producer price index rose 1.7% in October evidently took many analysts, and the stock market, by surprise. Although this increase is the steepest in 15 years in the United States, it remains in line with other signs of inflation that global retail markets have been experiencing this year, according to the Ernst & Young Global Pricing Trends Report released last month.

The E&Y report offers a 12-country snapshot of trends in retail and consumer products over the past five years, and a macro-view of pricing trends in the apparel, food and beverage, and household furnishings sectors. The report pegs a general increase in commodity prices and resulting increases in prices of wholesale goods earlier this year directly to rising oil prices.

The E&Y report also shows that the U.K. and Spain have the best-performing European retail economies over the last five years; Canada and Australia have shown consistent growth during the same period; Germany, France, The Netherlands, and Switzerland are categorized as undergoing structural reform; Japan, South Africa, and Israel are categorized as undergoing transformation; and the United States is the single country in the category of turnaround.

Of the 12 countries surveyed in the report, the United States is the most dependent on retail sales, and has experienced the most significant retail consolidation. The U.S. is also one of the countries—along with Israel and Switzerland—in which excess retail square footage and too few customers have made retailing especially competitive. Global expansion continues in Japan and Europe, while governmental regulations on working conditions and retail expansion have had a significant impact in Germany and France.

For copies of the report, contact Wendy Hirschhorn at (212) 826-8790.

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