Soaring inflation across the U.S. is not possible to disregard. From the gas station to the food market to the house, every a part of life is being impacted.

And that’s true for the sweetness sector, too. In a slew of summer trading updates, global beauty firms cited inflation as a headwind that has caused price increases.

Coty Inc., whose brands include CoverGirl, Gucci Beauty, Lancaster, Kylie Cosmetics and Skkn by Kim, implemented low-single-digit price increases in the course of the second half of fiscal ’22 and is now within the means of arranging more hikes, this time within the mid-single-digits.

“That’s the way in which we’re tackling this inflation,” chief executive officer Sue Nabi said in an August interview.

On the Estée Lauder Cos. Inc., executive vice chairman and chief financial officer Tracey Travis told Beauty Inc that while the firm often increases prices across the board every year, it did more so this yr as a consequence of inflation — at around a mean rate of 5.5 percent. A few of that’s reflected in latest products that were introduced at higher prices.

And Ulta Beauty, to call yet one more, revealed that it received numerous price increases from brand partners in the primary half of this yr. It expects to receive additional increases throughout the remaining of the yr.

To date, this has not appeared to affect consumption — even on the prestige level.

Coty’s prestige fragrances, for instance, have been flying off the shelves, with particularly strong performances from Hugo Boss, Burberry, Chloé, Calvin Klein and Gucci Beauty, which delivered 20 percent growth within the fourth quarter and helped the general prestige sector to grow of 16 per cent year-over-year, to $662.8 million.

At Ulta, each prestige and mass makeup delivered double-digit comp growth in its second quarter, in comparison with the identical period a yr earlier, leading the retailer to lift its full-year outlook.

Lauder, meanwhile, continues to see the prestige beauty market grow by double digits within the U.S., in keeping with Travis.

Citing Leonard A. Lauder’s Lipstick Index, the mogul’s theory that beauty sales increase during tough economic times, she said: “We’re a category that it’s an inexpensive luxury, particularly once you’re making selections about what you desire to to purchase from a discretionary standpoint.”

Coty’s Nabi believes that its latest set of figures prove that it’s more a fragrance index moderately than a lipstick one. “Fragrances speak to everyone — regardless of the age, regardless of the gender, and what we have now seen, which is the truth of the information and statistics, is that this beauty market is lifted by the fragrance consumption and this just isn’t female or male. It’s each and it’s mainly also Gen Z.”

But whatever measure you like, can this resilience last, at the same time as inflation refuses to budge and recession fears mount?

In accordance with analysts, the short answer is yes, at the same time as the newest official figures showed that while consumer spending grew ever so barely in July, it was at a slower pace than in June.

As has been seen in previous downturns akin to the 2008 financial crisis, while there was trade down during past downturns, generally nobody leaves beauty.

Olivia Tong, an analyst at Raymond James, said that the resilience of beauty has been bolstered by a large reopening after COVID-19, resulting in more travel and going out, in addition to innovation within the sector. She believes this trend can delay — so long as there are not any serious disruptions to household income akin to a job loss.

“Beauty is an inexpensive luxury. It’s not a automotive, it’s not a handbag, it’s not a vacation and quite frankly a lipstick is cheaper than going out for dinner and lasts longer,” she said. “So to the extent that you simply get a bit of gift for yourself, provided that there’s not been a cloth disruption to your household, but assuming that you simply are in a comparatively mild slowdown, then your patterns may not change as materially as in another categories.”

Neil Saunders, managing director of GlobalData, added: “While the lipstick effect looks like a cliché, it is predicated on a truth that continues to be relevant, namely that customers are very reluctant to offer up little beauty treats and indulgences and, indeed, feel like these are deserved rewards for living through a tougher time. Outside of indulgences, it’s also the case that many beauty and skincare routines are very much embedded into people’s lives so there may be great reluctance to reduce on any of the products related to them.”

He sees some but not much downside risk to the sweetness segment, which he thinks might be one among the winners over the lucrative holiday period.
 
So, while there could also be trade right down to come and retailers akin to Ulta say they’re prepared to regulate accordingly if needed, it’s unlikely that there might be a mass exodus from beauty anytime soon.

As Olaplex’s president and chief executive officer JuE Wong puts it, “You continue to must wash your face, you continue to must wash your hair, you continue to must shower.”