Today is Valentine’s Day, a day when many celebrate romance, although the scope of the day has expanded to friendship and even just simple holiday fun. According to the National Retail Federation, Valentine’s Day ranks fourth in holiday spending, with average spending over the last three years well north of $150 per person. For those wondering what the holiday might cost compared to last year during this stretch of elevated inflation, LPL Research’s Valentine’s Day Inflation Index is the answer.
Give The Gift Of Time…Or Jewelry
We’ve divided our Valentine’s Day Index into four components [Figure 1], capturing four favorite ways to celebrate the day. When it comes to romance the best gift is time together, and that’s where three of the four components are focused. In fact, it’s probably not bad general life advice to make spending time with the people you care about at least three times as important as material wants. Our three components for spending time together are a night in (a home-cooked meal, wine, flowers and candy), a night out (dinner out, a sitter and theater tickets), and a vacation getaway (airfare, lodging and meals). If for whatever reason none of those quite fits your circumstances, it’s hard to go wrong with jewelry, which includes watches (hint hint). Of course, these can all be mixed and matched and there are budget options for each, but you’ll still need to deal with rising prices.
Inflation Hasn’t Hit Valentine’s Day As Hard
Thankfully, inflation hasn’t hit Valentine’s Day as hard as the broad economy. Our Valentine’s Day Index looks at annual prices, and while the index matches 2021 Consumer Price Index (CPI) inflation, at 7%, it’s lower beneath the surface. Two of three components (a night in and a night out) are materially lower. Vacation Getaway inflation is higher, but that’s after a sharp Covid-19-related decline in 2020, so the two-year price movement is just under 1% a year. But even so, the Valentine’s Index is relatively affordable compared to inflation in the broad economy, and each component is still at a 10-year high.
The relative affordability of the Valentine’s Day Index is as much about what’s not in it as what is. Energy commodities (+49% in 2021) and used cars and trucks (+37%) are both noticeably absent. Some of the other categories that saw double-digit inflation in 2021 that you can avoid on Valentine’s Day: living room, kitchen and dining room furniture (+17%), washing machines (+12%), men’s suits (+11%) and new cars (+12%). Car rental (+36%) was also very high, so if you do travel, choose an option where cabs or ride services will do.
A Night In And A Night Out Remain Relatively Affordable
Looking at the cost of an evening in, while prices for candy, a home cooked meal and flowers were all roughly in line with core CPI inflation (which excludes food and energy), the fourth element, a glass of wine at home, has seen next to no price increase at all (In case you were wondering, the Bureau of Labor Statistics does specifically track the price of wine for home consumption). However, you may want to think about what you’re cooking since some food prices have climbed quite a lot. Prices for meat, poultry, fish and eggs were up about 12% in 2021; fruits and vegetables were up about 5%; but your best option may be to skip dinner and go right to dessert sundaes, since dairy prices were only up about 2%.
Prices for a dinner out, up almost 7%, have climbed more quickly than a dinner in, but childcare costs have remained relatively restrained so it won’t cost you that much more in 2021 to hire a sitter, if you can find one. Responsible older siblings are always a good budget option, but take years of advance planning.
When it comes to a vacation getaway, hotel prices have picked up dramatically in the last year, up nearly 28% after falling 11% in 2020. Airfares also collapsed dramatically in 2020, falling almost 20%, but have barely budged in 2021, climbing a little over 1%. However, airfare costs are off to a soaring start in 2022, up over 2% in January alone, likely due to rising fuel costs.