Rich hit as cost of lavish living soars

By Douwe Miedema

ZURICH (Reuters) - Prices for luxury goods rose twice as quickly as consumer prices this year, a study found, showing the jet set need even more to fund their lavish lifestyle.

Forbes's Cost of Living Extremely Well Index (CLEWI) -- which measures the price of a basket of luxury goods -- rose by 6 percent in the year to August 2007, Forbes said, more than twice the U.S. consumer inflation rate.

"The bottom line is, if you have money and you want to spend it you're going to spend it," said Scott DeCarlo at Forbes.

"A normal consumer may pull back, but if you're buying any of these items I don't think the cost of inflation will have any effects," he also said.

The CLEWI has risen at twice the pace of consumer inflation in the last 30 years. The index stood at 772 points in 2007, while the U.S. consumer price index was at 365. Both series started at 100 in 1976.

The number of millionaires and billionaires worldwide is rising rapidly. A study by Cap Gemini showed they held $37.2 trillion in total wealth at the end of 2006.

Soaring prices for oil and other commodities, healthy global economic growth, and the rise of a new affluent middle class in emerging economies in Asia and Eastern Europe are all reasons to explain why cash is flowing in.

The wealth bonanza has caused demand for luxury goods to soar, pushing prices to previously unheard of levels.