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Inflationary pressures on Valentine's Day
Just this week, all lovers can celebrate their love on Valentine's Day. This commercial holiday also affects the markets and consumers are feeling the rapid inflation in various segments.
Many companies are trying to make some profits out of this lovers' holiday. The busiest segments are areas ranging from food sales, hotels, flower and sweets sales, taxi services and the catering sector. However, consumers are more burdened with higher prices this year as inflation is running above 20% in real terms in some countries.
Chocolate companies such as Mondelēz, Nestlé and Lindt have increased their prices for chocolate by around 11% or more. In the case of Tesco, a popular choice throughout the year is their Finest Dinner for Two, where you can get a main meal, one side, a dessert and a drink for the Clubcard price of £12.
The latest survey from ratings platform Trustpilot shows that 41% of Americans say love is not in their budget, and a further 23% are still undecided about whether they will attend this year's Valentine's Day celebrations. However, according to the National Retail Federation, the results show that spending on Valentine's Day in 2023 could reach as much as $25.9 billion. That could leave Americans spending an average of over $190 on candy, flowers and other gifts, up from around $175 in 2022. These huge sums certainly help the global economy and some stocks as well. So which stocks should you be watching?
For example, Mondelēz shares started to show an increase during Valentine's week. Mondelēz International operates globally in Latin America, North America, Asia, the Middle East, Africa and Europe.
Modelez International's stock performance over the past 5 years. (Source: Investing)
In the foodservice sector, we are also seeing high price increases compared to last year. London's Michelin-starred Ritz restaurant has set the price of a four-course Valentine's menu at £395 per person this year, up from £325 last year. Across America, we're deciding whether to invite someone to a fancy dinner that costs a pretty penny, or stay home and crack open a bottle of champagne, or bring chocolates for someone special. The trend in the catering sector continues to be home delivery. Globally, the impact of consumer eating habits will have an impact on restaurant footfall. Valentine's Day should therefore be a boost for the catering sector in general.
Adam Austera, analyst Ozios