Valentine’s Day: Gifts are more expensive – 06/09/2023 – Market

Couples looking to celebrate Valentine’s Day should find higher prices in 2023, despite inflation showing recent signs of a lull in Brazil.

This is what a survey by economist Matheus Peçanha, a researcher at FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation) indicates.

In the 12-month period through May, the prices of 30 items associated with Valentine’s Day rose by an average of 6%, according to the analysis, which uses data from the CPI-S (Consumer Price Index – Weekly).

The variation is equivalent to almost twice the inflation measured in general terms by the indicator, which was 3.02% in the same interval.

The IPC-S is calculated by FGV Ibre in seven capitals (Belo Horizonte, Brasília, Porto Alegre, Recife, Rio de Janeiro, São Paulo and Salvador).

Valentine’s Day will be celebrated next Monday (12). The basket with 30 items associated with the date comprises eight services and 22 products.

Considering only services, accumulated inflation up to May was 5.89%. The eight analyzed rose in the period.

The biggest increase was that of prices for accommodation in a hotel or motel (6.53%), followed by advances in restaurants (6.27%), beauty salons (6.19%) and cinemas (5.73%).

Theater (4.36%), gym (4.18%), streaming services (3.94%) and musical show (2.44%) complete the list.

According to Peçanha, the highs reflect the more heated demand for services after the end of pandemic restrictions.

“On the services side, there is the question of demand. The year 2022 was driven by this sector. With economic activity reheated, price pressure comes along”, says the economist.

Considering the 22 products that make up the Valentine’s Day basket, the average price change was 6.07%. There were rises in 18 goods and declines in four.

The biggest advances came from soap (21.68%), bonbons and chocolates (12.9%), books (10.31%), makeup articles (9.76%), shaving products (9.37%) and perfume (8.70%).

On the product side, Peçanha highlights the increase in items such as cosmetics and hygiene. “This slowdown is slower than expected,” he says.

He says specific issues have also impacted prices on some of the goods associated with Valentine’s Day. In this sense, he points out a problem in the supply of animal tallow, which would have pressured soap inflation.

The four products on that date that had price reductions were cell phones (-2.17%), computers and peripherals (-1.15%), bicycles (-0.68%) and jewelry (-0.25%).

As expected, it is possible to see the effect of high interest rates on the inflation of higher value goods, such as electronics and bicycles, points out Peçanha.

High interest rates usually reduce demand for items whose sales depend on installments. More expensive credit discourages demand and thus tends to dampen prices.

I swear to brake trade

The high level of interest was pointed out by the CNC (National Confederation of Commerce in Goods, Services and Tourism) as one of the factors that should curb Brazilian retail sales on Valentine’s Day.

According to the entity’s projection, the sector should move R$ 2.54 billion in business on that date in 2023. If confirmed, the value will represent a decrease of 2.2% compared to 2022 (R$ 2.6 billion).

On the other hand, the forecast value for 2023 (BRL 2.54 billion) was slightly above that recorded in 2019 (BRL 2.53 billion), in the pre-pandemic period. The data were released after discounting inflation.

“Despite the deceleration of inflation over the last few months, interest rates are higher than last year, currently standing at the highest level in five and a half years”, says CNC analysis.

The entity states that, according to the BC (Central Bank), in April 2023, the average interest rate on credit operations with free resources reached 59.7% per year.

“An unfavorable scenario for gaining traction in trade sales is also compounded by the high degree of commitment of families’ income to debt”, declares the CNC.

Bars and restaurants expect higher revenue

In the case of bars and restaurants, the expectation is positive for most of the sector, indicates research by Abrasel (Brazilian Association of Bars and Restaurants).

According to the entity, 79% of entrepreneurs in the sector (4 out of 5) project an increase in revenue on Valentine’s Day, compared to the same date last year.

For 57% of the total, the increment must be up to 30%. The survey had the participation of 2,141 owners and managers of bars and restaurants in Brazil.

According to the president of Abrasel, Paulo Solmucci, the celebration usually represents the best billing day of the year for many businesses.

“This year we will have Valentine’s Day on a Monday, which we consider very positive, as it attracts the public to a day of the week that is normally less busy, when some establishments would not even open,” said the businessman in a note.