Inflation is hair-raising for the beauty industry

The beauty industry is experiencing a new wave of demand for affordable treats, from mini-sized cosmetics to cheaper body mists, and salon-grade hair treatments used at home are emerging as a key part of the trend. Men and women are fashioning glossier locks as the antidote to tough times, with a healthy scalp and stylish tresses becoming the new perfect pout or mood-boosting scent.

It’s reminiscent of the “Lipstick Index” coined by Leonard Lauder, the late chairman of Estée Lauder, to describe how consumers cut back on bigger purchases amid uncertainty, opting for small indulgences instead.

When inflation spiralled in 2022, it ushered in the Fragrance Index with people reaching for luxury scents. As consumers grapple with more expensive food and fuel once more, home hair products are proving popular pick-me-ups. Haircare has the potential to be the next big thing in beauty, offering an opportunity for expansion as explosive fragrance sales settle down to more pedestrian growth.

But economics aren’t the only factor driving the hair boom. GLP-1 weight-loss drugs have been linked with hair thinning, while younger consumers suffering from hair loss are more openly discussing the health of their scalps on TikTok and Reddit.

Haircare was the fastest-growing part of the US premium beauty market by sales in the first quarter of this year, according to research group Circana, expanding in the so-called prestige sector ahead of fragrances. Haircare sales at L’Oréal, the world’s biggest beauty company, rose 12.9 per cent in 2025, outpacing all other divisions, including fragrance.

As with the perfume craze, the red-hot hair market has its origins in pandemic-era lockdowns. After Dyson released its Airwrap in 2018 — a styler that could dry, curl and smooth hair — a torrent of TikTok videos landed demonstrating how to achieve its trademark voluminous waves.

Consequently, hair has undergone a “skinification,” with serums used to nourish and prepare, heat sprays to protect and oil to tame frizz, mimicking multi-product skincare routines. Indeed, L’Oréal told a conference last week that almost three-quarters of French women embraced more than three haircare steps.

For all the videos demonstrating how to get a bouncy blow-out, many people around the world were grappling with the anxiety of the pandemic. One side effect of stress is hair loss. Consequently, they turned to scalp treatments to strengthen their hair and stimulate growth. At the same time, many upmarket brands, faced with shuttered salons, expanded online, so shoppers could splurge on their expertise