(FORTUNE Magazine) – You thought that the conspicuous consumption of the 1980s was over? That few would again pay $250 for a luxury scarf or $1,500 for a briefcase? Wrong. Luxury is back with a roar. The world's biggest manufacturer of luxury goods, France's LVMH, recently announced a 36% profit increase for the first six months of 1994, vs. the first half of 1993. According to Comit Colbert, a French trade group for luxury brands including Dior, Herms, Lalique, and Christofle, worldwide sales of leather bags, haute couture fashion, china, crystal, and perfumes increased from $4 billion in 1988 to almost $6 billion in 1994. Growth in the luxury market came to a crashing halt after the Gulf war. But demand has picked up again. Why the turnaround? For one, the market is now global, with Asian demand growing particularly fast. Furthermore, manufacturers like LVMH, whose brands include Louis Vuitton, Moet-Hennessey, and Christian Lacroix, now win customers by keeping prices stratospheric. Says Comit Colbert President Christian Blanckaert: "People want quality. They want value. But if you lower prices, they think that you are lowering the value and lowering the quality." Sales at Christofle, for example, dropped 14% in 1993 when the chinamaker lowered prices. Americans are returning to luxury as well. Sales at Neiman-Marcus stores, for example, are up 15.8% from 1992. Of course, with a sniff some Parisians say the turnaround was inevitable, given the mere existence of French luxury. Says Jacques Mouclier, president of the French Federation of Haute Couture: "People still want pleasure in their lives. And we French still know how to provide it."