Producer Price Index: Leather

Leather prices are projected to increase 0.1% in 2026 to 203.8, driven primarily by constrained cattle supply that will be slow to rebuild, keeping volumes tight and limiting immediate production growth for processors and tanners. At the same time, the shock of the early 2025 tariffs will fade as major importers, such as the European Union, suspend key retaliatory duties on US goods through August 2026 while they negotiate a longer-term trade agreement aimed at stabilizing market access. These easing trade conditions are expected to support a rebound in US leather and hide exports after the loss of China as a major buyer in 2025, initially depressing prices.

?The leather market experienced significant volatility from 2021 to 2026. In 2021, as pandemic restrictions eased and downstream industries like vehicle and sporting goods production resumed, leather prices increased sharply by 22.5%. This historic growth reflected a rebound in consumer demand previously suppressed by the COVID-19 pandemic. However, in 2022, rising inflation and higher interest rates limited consumers' discretionary income, especially for luxury goods such as cars and sporting equipment that utilize leather, resulting in a 1.9% price decline. Despite persistent inflationary pressures, 2023 saw a 0.9% rise in prices, largely due to increased consumer spending and higher production costs for leather goods, which prompted manufacturers to expand output to meet demand, although the availability of lower-cost imports capped price growth. In 2024, the leather price index showed a modest gain of 0.6%, as overproduction in chemicals used for tanning and finishing temporarily reduced input costs.

Shifting global dynamics impacted the US leather market over the five-year period. While global demand for leather rose due to population growth and economic expansion in countries such as China and India, domestic demand for unprocessed leather continued to fall as textile manufacturing migrated overseas. Nevertheless, US exports benefitted from robust world demand. Competition from synthetic fibers remained a continuously suppressive force on leather prices, especially as synthetic leather products gained prominence. Crude oil prices also influenced this dynamic, since higher oil costs increase the price of synthetic fibers, driving some substitution back towards natural leather and other animal-derived materials. Animal rights activism continued to present a minor but noteworthy constraint on demand.

The interplay of these trends resulted in only moderate price dip resembling a CAGR of 0.2% from 2021 through 2026. Structural changes in supply chains, input costs, and competition from alternative materials remain central to price determination. Global economic shifts and consumer responses to inflation further shaped the environment for both supply and demand of leather, leaving the industry with gradual upward price movements but persistent underlying volatility.