The chairman of Richemont, the Swiss owner of Cartier and watchmakers including IWC and Vacheron Constantin, said inflation is starting to hit luxury demand in Europe.

Persistent higher prices are prompting even well-heeled European consumers to scale back buying, according to Johann Rupert, the leader and controlling shareholder of the luxury conglomerate.

“In Europe, ongoing inflation is starting to impact local demand,” the billionaire South African told shareholders at the company’s annual meeting in Geneva on Wednesday.

Rupert, who controls Richemont through a trust that owns the majority of voting shares, said European households in some countries were spending a higher percentage of income on basic necessities than they had in the past decade.

“We’ve seen the squeeze,” he said.

Richemont shares fell sharply after Bloomberg News reported the comments and after HSBC lowered price targets for Richemont and several other companies in the luxury sector including LVMH, Kering and Prada. LVMH shares declined 3.6% in Paris while Richemont stock fell more than 5% in Switzerland.

The company had warned in July that demand in the US and China, two of the biggest markets for luxury goods, was starting to sputter. Rupert said the good news for European markets was that Chinese shoppers had begun traveling again.

Read More: Richemont Drops on Signs Luxury Demand Falling in US, China

Luxury sales boomed during and coming out of the pandemic as shoppers, helped by low interest rates and pent-up savings, splurged on pricey watches, handbags and jewelery. As central banks have swiftly raised borrowing costs to counter surging prices, Rupert said he expects disruptions to persist.

“We cannot expect that after 10 years of excesses to return to normality in a year or two. It’s going to take longer,” he said.

(Updates with further comments from Richemont chairman and industry stock reaction beginning in paragraph three)