While the broader inflation rate saw some easing in July, footwear prices continue to rise at sharp rates.
According to new data from Footwear Distributors and Retailers of America (FDRA), footwear prices rose 6.2% in July compared to last year. Men’s footwear was up 4.9%, women’s was up 6.4% and kids’ was up 7.7% last month.
Given the July advance, footwear prices over the first seven months of the year are up 5.8% from the same period last year and are on track to rise in 2022 at the sharpest rate in decades, the FDRA said.
Some relief may be on the way, however. The organization said it expects footwear prices to moderate in coming months as imports and retail inventories rebuild and stabilize. The FDRA also pointed out that consumer demand for footwear is softening, which will lead to easing of shoe prices in the months ahead as supply outweighs demand.
This data comes one day after the Bureau of Labor Statistics’ latest Consumer Price Index (CPI) saw that inflation eased slightly last month but held near its record high.
According to the latest CPI release on Wednesday, inflation increased 8.5% in July from a year ago, down from its 40-year high of 9.1% a month ago.
The report also showed that on a monthly basis, the broadest measure of inflation was unchanged after rising 1.3% in June. Core CPI, which excludes the volatile food and energy components of the report, remained firm, climbing at an annual 5.9%, unchanged from June’s figure.
“This modest easing confirms our outlook we had briefed FDRA members on a few weeks ago,” Matt Priest, president and CEO of FDRA, told FN. “In fact, we look for the inflation rate to continue to ease—but still remain unusually high—in coming months.”
The good news in Wednesday’s report noted that energy prices fell 4.6% in July, while gasoline prices dipped 7.7% last month. This was offset, however, by a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs.
“The not so good news is that 8.5% is still eyewatering and continues to impact many households, especially those towards the bottom of the income spectrum,” Neil Saunders, managing director of consulting firm GlobalData, wrote in a note to clients on Wednesday.
Saunders added that these “mixed signals” do not relay a positive message to consumers, as his research is showing more people are trimming the amount they buy, trading down to cheaper options or shopping around more to find bargains.
What’s more, Adobe also released its Digital Price Index earlier this week, which showed online prices decreased 1% year-over-year and dropped 2% on a monthly basis in July. July was the first month of online deflation after 25 consecutive months of persistent price increases, Adobe said.
This deceleration of overall price increases could signal, however, that The Federal Reserve’s efforts to curb the highest rate of inflation in 40 years may be working. Last month, The Fed hiked interest rates by 0.75%, repeating the same hike seen in June. “The committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2% and anticipates that ongoing increases in the target range will be appropriate,” the Fed said in a statement at the time.
At the same time, the U.S. Senate passed the Inflation Reduction Act, a legislation package meant to help reduce inflation with new proposed tax rules and cost cuts, on Sunday. If enacted, the historic legislation will make a down payment on deficit reduction to curb inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40% by 2030.
According to the legislation, the package would raise an estimated $739 billion in tax revenue, including $313 billion through a 15% corporate minimum tax and $124 billion through the IRS enforcement of a reformed tax code.