Veena McCoole<\/p>\n
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Inflation is the rate at which the prices of goods and services increase over time. It occurs when the cost of production rises, which drives prices up, or when demand outpaces the economy\u2019s ability to produce additional goods and services. It influences the cost of living for individuals, as well as interest rates<\/a> and macroeconomic growth. <\/p>\n Since the COVID-19 pandemic, economies around the world have been contending with rising inflation rates. In the U.S., for example, inflation rose by as much as 9.2% year-over-year in June 2022. In June of this year, it climbed by 2.7%<\/a>. <\/p>\n These rising costs can affect different industries in many ways, and art is no exception. \u201cThe macroeconomic position inevitably impacts people\u2019s decisions about art,\u201d said Simon Oldfield, a curator, art dealer, and lawyer. \u201cWe\u2019re all connected to the wider picture, including inflationary pressures, and we don\u2019t leave those thoughts and concerns at the door when it comes to art.\u201d<\/p>\n Art\u2019s relationship to inflation is multifaceted. A historical stability in artwork values has gained recognition among some investors as a safeguard asset against broader price rises in the economy. But like any asset, art itself can also be subject to inflationary behavior. Here, we disentangle the factors relating to art and inflation.<\/p>\n Why art is viewed as a hedge in inflationary periods<\/p>\n In recent years, art has gained a reputation as an inflation hedge, meaning that it is viewed as offering protection for investors against a decline in the purchasing power of money (when the same amount of money buys fewer goods and services). <\/p>\n One of the primary reasons for this is that artwork prices are viewed as stable over time, unlike cash or securities, which can lose purchasing power during inflationary periods. <\/p>\n Unlike other major assets, art is a non-fungible, illiquid asset: Each work of art is a unique object. Its value is also based on factors<\/a> such as taste, reputation, and rarity, which also set it apart.<\/p>\n Dirk Boll, deputy chairman of 20th and 21st Century Art at Christie\u2019s, says that an artwork\u2019s price stability is correlated with its assumed artistic quality. \u201cEven when prices go down, prices go down last and least for artwork of the highest quality,\u201d he said. \u201cThe question becomes who defines quality, and how much of the quality assessment now comes from public opinions and the community rather than art critics and institutions.\u201d<\/p>\n During pre-sale estimations at Christie\u2019s, Boll says sellers often come with expectations of how a work should be priced. These include factors such as the price when they bought the piece, buyer\u2019s premiums, import costs, and exchange rate information. \u201cSadly, the present value of a piece is not influenced by what was previously paid,\u201d Boll shared. \u201cThe value of art follows other criteria, not financial historical data.\u201d<\/p>\n Purchasing art is also driven by many factors that make it different from other asset classes. \u201cBehind every work of art, there is a creator, and most collectors are respectful of their relationship with the artist and aren\u2019t in it to make a quick buck,\u201d said Oldfield. <\/p>\n How inflation can impact artwork prices <\/p>\n Despite art\u2019s reputation as an inflation hedge, works of art themselves can also be subject to inflationary factors. The cost of creating, exhibiting, insuring, transporting, and selling art goes up with inflation<\/a>. These higher costs are often passed on to buyers, resulting in price rises that affect both the primary and secondary sides of the art market.<\/p>\n According to Maddox Gallery<\/a> co-founder Mario Zonias, rising material and production costs have become a \u201cserious challenge\u201d for artists working today. \u201cThese pressures have grown steadily over the past two years, and tend to hit emerging artists the hardest,\u201d he said. <\/p>\n Bianca Bonifacio, art investment associate at Anthea Art Investments, also noted that shipping is another of the most prominent areas to see prices rise. \u201cIn the last two years, we have seen an increase in the cost of shipping, which has an impact on the global market,\u201d she said.<\/p>\n But the relative importance of this depends on the cost of the work: for lower-value works, shipping fees can be a larger proportion of the work\u2019s value, but more akin to a rounding error for a seven-figure work. At the top end of the market, it\u2019s more likely that collectors\u2019 individual circumstances\u2014rather than macroeconomics\u2014will dictate how they respond. . At the top end of the market, it\u2019s more likely that collectors\u2019 individual circumstances\u2014rather than macroeconomics\u2014will dictate how they respond. <\/p>\n \u201cPrices may be up, but if money coming in is also up, that doesn\u2019t necessarily mean a downturn in art purchasing for some,\u201d noted art advisor David Shapiro. \u201cPeople in the market for a Pablo Picasso<\/a>, perhaps, aren\u2019t as swayed by inflation and day-to-day costs.\u201d<\/p>\n Sometimes, increased shoots in demand for certain artists can lead to major price rises for their artworks within a short space of time. The last period of major price inflation in the art market began after the COVID-19 pandemic, from 2021 to 2023, when factors such as fiscal stimuli and pent-up consumer demand caused some artwork prices to skyrocket. Many artists saw their prices for their artworks rise to extreme highs, sometimes within the space of months. <\/p>\n The sudden and often aggressive spikes in prices for artworks in parts of the art market proved unsustainable in some cases. \u201cEven though inflation then was not as high as it is now, the value of [some] artists\u2019 work achieved unreasonable highs in record time, and fell just as quickly afterwards,\u201d said Arushi Kapoor, an art advisor and founder of The Agency Art House. <\/p>\n But while inflation impacts the demand for and pricing of art, there is a limit to the role that market forces can play. Art is an industry where buying decisions are based on a variety of emotive factors that are not always purely financial. <\/p>\n \u201cPeople don\u2019t make art because the economy is good, they make art because they are artists,\u201d said Simon Oldfield. \u201cCollectors buy art because they need it in their lives.\u201d <\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2025\/08\/1754972468_269_d7hftxdivxxvm.cloudfront.net\")
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