The chairperson of Richemont, the Swiss owner of Cartier and watchmakers, including IWC and Vacheron Constantin, said inflation is starting to hit luxury demand in Europe.

Persistent higher prices are prompting even well-heeled European consumers to scale back buying, according to Johann Rupert, the leader and controlling shareholder of the luxury conglomerate.

“We’ve seen the squeeze,” the billionaire South African told shareholders at the company’s annual meeting in Geneva on Wednesday.

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Rupert, who controls Richemont through a trust that owns the majority of voting shares, said European households were spending a higher percentage of income on basic necessities than they had in the past decade.

The company had warned in July that demand in the US and China, two of the biggest markets for luxury goods, was starting to sputter. Rupert said the good news for European markets was that Chinese shoppers had begun travelling again.

Luxury sales boomed during and coming out of the pandemic as shoppers, helped by low interest rates and pent-up savings, splurged on pricey watches, handbags and jewellery. As central banks have swiftly raised borrowing costs to counter surging prices, Rupert said he expects disruptions to persist. 

“We cannot expect that after 10 years of excesses to return to normality in a year or two. It’s going to take longer,” he said.