SALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX
LONDON | 2010
index results
INFLATION RETURNS TO THE LUXURY GOODS SECTOR
The Stonehage Group, a leading Multi Family Office advising
Ultra High Net Worth (UHNW) individuals and international
families, today announced that prices of luxury goods and
services in London increased by an average of 0.6% in the 12
months to the end of April 2010, marking a small return to price
inflation following a 3.7% deflation the previous year.
This small increase, measured by the London edition of
Stonehages Affluent Luxury Living Index (SALLI), compares to an
average inflation rate of 3.7% measured by the UK Consumer Price
Index (CPI) over the same period. This inflation trend below CPI
is expected as the cost of luxury goods and services recover from
the lows in the recession at a more cautious rate in comparison to
more general costs of domestic goods and services.
Last year, SALLI highlighted the deflationary reaction of
luxury goods and services during a recessionary economic
environment. SALLI this year reflects similar themes, but with
more cautious price recovery when compared to the CPI.
Key findings include:
HNW inflation is much more volatile than the standard rate
of inflation, as measured by the CPI, tending to exceed
standard inflation in good times and significantly fall short
in times of downturn.
High-end residential property rentals in central London
decreased by more than 8%, a reflection of an increase
in the supply of property and a decrease in demand as the
recession hit City jobs.
Luxury consumables rose 24.1% on the back of rises in wine
and luxury foods such as caviar.
Inflation in the travel sector dropped to 0.6% from 11.7% a
year earlier, as small increases in cost of flights were more
than offset by decreases in the prices of luxury
accommodation, as travel companies continued to offer
discounts, packages and special incentives. Last years
figure was impacted by big increases in the costs of private
air travel.
The investments of passion category, which includes cars
and luxury clothing, showed a significant price increase
of 5%, as the prices of luxury cars recovered from the heavy
discounting of a year ago, when inflation in this category
was 2%.
The culture and entertainment category was up 15.2%
compared to a 20.5% decrease a year earlier. This
was partially driven by a significant increase in art prices,
1 S ALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX | LONDON 2010
illustrated by record art auction results in early 2010, which
was subsequently sustained as the world record price of
$106 million was paid for Picassos Boy with a Pipe at an
art auction in New York.
SALLI this year would have been lower had it not been for
the increase in VAT to 17.5% at the beginning of the year
which has affected the baskets of goods used to make up
both SALLI and CPI.
As the UK imports many luxury products and as SALLI
includes overseas travel destinations, the relevant price
movements have also been affected by fluctuations in the
foreign exchange rates. When considered with the VAT
rate changes, the evidence suggests that the luxury goods
and services market absorbed such pricing factors within
the domestic market.
Ronnie Armist, Director at Stonehage Investment Partners,
commented: SALLI allows Stonehage Investment Partners to
analyse the real costs that affect our clients. The return of a
small level of inflation, as measured by SALLI, after last years
deflation, points to some recovery in the prices for luxury
goods and services. However, HNW consumers are continuing
to negotiate discounts in key spending sectors such as luxury
travel accommodation. With general inflation rising modestly,
as evidenced by CPI, and continued weakness in the economy,
it looks unlikely that luxury inflation will pick up strongly.
Stonehage Affluent Luxury Living Index (SALLI) London, a proxy
for price inflation experienced by London-based HNW and
UHNW families, was first published in 2007 in order to track
the prices of a basket of luxury goods and services regularly
purchased by UHNW clients. The basket forms the basis of the
index and consists of approximately 50 goods and services on
a per use weighted average basis. The basket includes items
such as private education, central London rental costs for a
family property, a days grouse shooting and fine wine and
cigars, based on Stonehages knowledge and experience of the
spending patterns of London-based UHNW families. Prices in
the index are the recommended retail prices (incl. VAT) and
SALLI accounts for the frequency of purchase of each item over
one year. Prices were recorded between 2002 and 2010.
The index methodology was verified by Professor Geoffrey
Wood of the Cass Business School.
EXECUTIVE SUMMARY
The Stonehage Affluent Luxury Living Index (SALLI) Price inflation between 2002 - 2009
was launched in 2007 in order to measure the inflation
Year SALLI CPI
experienced by High Net Worth (HNW) and Ultra High Net
Worth (UHNW) individuals and families. We believe that it 2002 - 2009 (total increase) 13.1 15.5
is the first Sterling-based index of its kind. 2002 - 2009 (annualised) 1.8 2.1
Source of CPI figures: Bloomberg (Dates used: 4/02, 4/06, 4/07, 4/08, 4/09); figures rounded
SALLI is an index comprising a basket of luxury goods and to one decimal place.

services determined by the Stonehage Group, based on our

Price inflation between 2002 - 2010
knowledge and experience of the spending patterns of HNW
and UHNW families. Prices in the index are the recommended Year SALLI CPI
retail prices (including VAT) and SALLI accounts for the
2002 - 2010 (total increase) 13.7 19.8
frequency of purchase of each item over one year. Prices
were compared between 2002, 2006, 2007, 2008, 2009 and 2002 - 2010 (annualised) 1.6 2.3
20101. For the purpose of this study we have assumed that Source of CPI figures: Bloomberg (Dates used: 4/02, 4/06, 4/07, 4/08, 4/09, 4/10); figures
rounded to one decimal place.
the basket comprises items purchased by an UHNW family
of two adults and two children. Year on year changes in the indices from 2002 - 2010

Year SALLI CPI

Wealth managers have traditionally used the Consumer Price
Index (CPI) as a measure of inflation when wealth planning 2002 - 2006 7.2 6.7
for their clients. CPI, the UK Governments official inflation 2006 - 2007 6.0 2.8
measure, does not focus on luxury goods and services and
2007 - 2008 3.3 3.0
therefore may not reflect the real inflation experienced by
London based HNW and UHNW families. SALLI, however, 2008 - 2009 -3.7 2.3
provides a more realistic measure of inflation since the 2009 - 2010 0.6 3.7
basket of goods and services is more relevant to HNW
Source of CPI figures: Bloomberg (Dates used: 4/02, 4/06, 4/07, 4/08, 4/09, 4/10); figures
and UHNW families. The index methodology was originally rounded to one decimal place.
developed by Professor Geoffrey Wood of the Cass Business
Price increase or decrease per spending category
School and the same methodology has been used each year.
The basket of items has been updated to ensure it remains Price increase or decrease
accurate and relevant. Category between
2009 - 2010 (%)
1
Prices for SALLI London were collected in April of each year. Consumables 24.1
Investments of Passion 5.0
Culture & Entertainment 15.2
Sports & Recreation -3.0
Housing & Family -5.6
Travel 0.6

about stonehage All Items 0.6

overview
Stonehage is a leading independent multi-disciplinary Family Office offering wealth management and advisory services to an
international clientele. Stonehage works with clients to protect and enhance their wealth across jurisdictions and generations. Our
interests are aligned with those of our clients.

Stonehage is owned by management and staff with ten offices around the world. Established in 1976 the Group currently employs
over 320 staff and manages the affairs of over 1,000 client families internationally. Stonehage was awarded the Family Office of the
Year award in 2009 by the Society of Trust and Estate Practitioners.

2 S ALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX | LONDON 2010

COMPONENT ITEMS OF THE SALLI INDEX 2010

1. CONSUMABLES

Beluga Caviar
Food
Foie Gras
Smoking Cohiba Siglo V Cigars
Liv-ex 100 Fine Wine Index
Drink
Liv-ex 25 Champagne Index
Nobu (19 Old Park Lane)
The Ivy (1-5 West Street)
Gordon Ramsay (68 Royal Hospital Road)
Restaurants
Hakkasan (8 Hanway Place)
Le Caprice (Arlington Street)
Tamarind (20 Queen Street)

2. INVESTMENTS OF PASSION

Top of the range Range Rover

Cars
Top of the range Aston Martin
Watches Patek Philippe mens Calatrava, white gold
Boodles Raindance platinum ring
Jewellery
Boodles Raindance platinum necklace
Burberry womans trench coat
Clothing Ede & Ravenscroft dinner suit
Turnbull & Asser two-fold 200 shirts
Perfume Clive Christian X perfume
Toys Hamleys 1920s classic Steiff bear

3. CULTURE & ENTERTAINMENT

Soho House annual membership

Memberships Quintessentially 24-hour global concierge service
The Walbrook annual membership
Royal Opera House grand tier box
Culture
Lion King theatre tickets
Art Artprice Global Index

3
COMPONENT ITEMS OF THE SALLI INDEX 2010

4. SPORTS & RECREATION

Wentworth Golf Club annual fee

Queens Tennis Club annual fee
Executive box hire at a London Premier League Football Club
Purdey shotgun
Sports Claridges Beauty & Fitness annual membership
Wimbledon mens singles final debenture tickets
Grouse shooting
Pheasant shooting
Polo Club annual membership
Boating Yacht Charter

5. housing & family

Housing Rental of a family house in Kensington and Chelsea

Botox treatments
GP consultation
Dental check-up
School Westminster School fees
Flowers Roses from Amanda Austin Flowers
Household Staff Full time housekeeper from Beauchamp
Hairdresser Womans hair appointment at Michaeljohn

6. travel

Business premier Eurostar return tickets to Paris

Transport
Virgin Atlantic upper class return flights to New York
Four Seasons Hotel, George V, Paris for a weekend in a duplex suite
Hotel Plaza Athenee, New York for a weekend in a deluxe room
Accomodation Hotel Byblos, St Tropez, France for a week in a duplex suite
Chalet Les Quatre Freres, Verbier, Switzerland for one week
The Tides Zihuatanejo, Mexico for a fortnight in the Tides Suite
NetJets 25-hour private jet card valid for a Light Jet
Private Transport
Brunel first class chauffeur service

disclaimer: This publication is intended to provide only general information and to highlight points of interest. It is not intended
to be comprehensive or sufficient for making decisions and should not be relied upon. Specific professional advice should be sought
on the facts of any matter before action is taken.

info@stonehage.com

www.stonehage.com

4 S ALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX | LONDON 2010