What is really behind the price increases is psychological. Burberry for example recently admitted that it would increase prices to attract new, wealthier customers after more 'exclusive' products.
Other brands such as Prada and Alexander Wang anticipate their consumers search for discounts so they are forced to artificially inflate prices to counter the margin pressure.
Of course, there is a threshold for any price increase, but in successful these increases can have significant impact on gross profits. As a general rule of thumb a company can improve their operating profit by more than 8% for each 1% improvement in price.
