The consumer price index rose 5.4% in June as inflation grew at its fastest pace since August 2008. While transportation-related costs accounted for the bulk of the increases — with prices for car rentals, used cars, gas, and airfare all surging tremendously from last year — shoes were also a notable culprit, as footwear prices jumped 6.5% year-over-year.
Women’s footwear prices saw the strongest spike, up 7%, the sharpest advance in nearly 32 years, according to the Footwear Distributors and Retailers of America.
As the U.S. economy reopens and Americans buy shoes for events, travel, back-to-school and a return to the office, consumer demand is rising. This has dovetailed, though, with skyrocketing supply chain costs caused largely by widespread freight congestion.
“Today’s inflation news is yet another sign that the shipping crisis is already having an adverse impact on our economy,” AAFA President and CEO Steve Lamar told FN. “Footwear companies need to get shoes to store shelves but this is proving to be cost-prohibitive or sometimes impossible as runaway freight costs, clogged ports and stranded container ships trip up our ability to meet growing consumer demand. We need Biden Administration leadership to untangle the shipping crisis and provide tariff relief now.”
About 99% of all footwear sold in the U.S. is imported, with the majority coming from China. These goods have been saddled with additional duties stemming from the Trump era, driving up costs for American companies even before the pandemic.
According to the FDRA, the current price acceleration is tied to both supply chain issues and higher wholesale costs, with the average landed cost of footwear rising again in May to $11.04 per pair, the highest May level on record, driven by a 10.2% jump in the cost of children’s footwear imports.
So while rebounding retail sales are strengthening the industry’s outlook for the year, further price increases could be ahead if current conditions don’t abate.
In a June survey conducted by the National Federation of Independent Business, 47% of small business owners said they are planning to raise prices, a share not seen since January 1981. Respondents were concerned primarily with the rising costs of materials and an increase in labor costs as businesses across the country struggle to find qualified applicants to hire for millions of open positions.