'There is a clear trend toward higher price points.' How rich people are shrugging off inflation — and why that means more pain for you

Because of that, luxury goods providers such as Rolex have been able to get away with raising their prices, even as middle-class customers increasingly abandon the brands. For Rolex, that’s because it’s successfully been able to pitch its products as investments, thanks to rising gold prices.

But these price increases aren’t just impacting luxury goods. Everything from flights to animal care have seen similar pivots to luxury, leaving middle-class households increasingly stranded.

“Companies are saying, ‘Let’s just jack up the price as high as we possibly can and extract as much from the small set of wealthy people,’” says former U.S. Department of Treasury director Kitty Richards.

Here’s what’s being impacted by what the Fed calls “unapologetic luxury,” and what that means for the people who are left behind.

Luxury goods and service prices are increasing, and so are non-luxury goods and services

Many companies who are increasing prices already cater to a wealthy clientele, such as Rolex and Cartier.

Indeed, jewelry prices as a whole have increased dramatically. As the price of precious metals has skyrocketed, jewelers have been forced to increase their prices, and have been met with wealthy investors hoping to use the jewelry as an investment.

“Brands and retailers who cater to a higher-end clientele are doing quite well,” says Abe Sherman, chief executive of California-based jewelry consulting firm Buyers Intelligence Group. “There is a clear trend toward higher price points.”

Pet wellness is trending upward, too. High-income pet owners are paying as much as $14,000 per year on dog grooming, giving their pets peptides and treating them to fur-brightening masks. They’re also having to deal with mounting vet costs at the same time.

But not every market facing a similar problem is luxury-only: Flights have also been getting more expensive. Faced with increasing oil costs due to the Iran War, flights have had to raise prices — or fold like Spirit Airlines. As a result, ticket prices are up 25%. Car prices are also up across both the new and used market.

The middle class is “squeezing more life out of every dollar”

With the cost of everything increasing, the middle class is having to pick and choose what it can pay for.

In the June Beige Book, one of the Kansas Fed’s contacts said that “middle-income households are squeezing more life out of every dollar before deciding to spend it,” resulting in what the Kansas Fed calls “growing behavioral adjustments.”

This includes things like skipping restaurants. And when residents do go out to eat, they go for less expensive meals.

“In contrast, higher-income households remained largely insensitive to price pressures,” the Kansas Fed said.