What's going on?

Zara-owner Inditex announced impressive results on Wednesday after some crafty price hikes.

What does this mean?

Inditex is just one of many retailers facing higher costs, but the world�s biggest clothing retailer�s been hiking its own prices to make up the difference. By no small amount, either: UBS data showed Zara�s prices were up 12% on average in July from the same time last year, overshooting inflation which hit 8.3% and 9.9% in the US and UK last month. Mix those (some would say greedy) price hikes with a super-strong US dollar, and the fast-fashion behemoth bulked its sales and profit by an expectation-beating 25% and 41% respectively over the six months leading up to the end of July versus the same period last year. And Inditex isn�t slowing down: the retailer told investors that sales from this August and the first week of September were up 11%.

Why should I care?

The bigger picture: The power to price.
Whether cheap-and-cheerful retailers or luxury stores are more able to weather inflation�s storm divides opinions. On one hand, price rises on lower-cost items might be small beer in absolute terms. But on the other, luxury brands can flex their �pricing power� ��jolting prices without scaring off customers ��more, since their clientele generally have higher budgets. But one thing�s for sure: brands that sit somewhere between the two can bank on neither smaller hikes nor fanatical brand loyalty, so they may have tougher months ahead.

Zooming out: It�s more than just pricing.
Inditex flies through its massive inventory, which is a life-saver in times like these: retailers with fast turnovers can push their prices up every time they release a new line. But because retailers tend to bump their inventory ahead of the shopping-heavy winter season, keeping stock flying out the door will be vital � especially if this selling season turns out to be as bad as some expect.