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Industry Spotlight > Broker Dealers

Valentine's Day Gifts at a Sweet Price Point: LPL

By Janet Levaux

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LPL Financial put out a sweet briefing on what lovebirds are buying on Tuesday and what they can expect to pay for these treats.

Valentine’s Day is the fourth-busiest shopping holiday of the year, according to the independent broker-dealer, which analyzed trends affecting popular holiday items.

What can shoppers expect in terms of prices in general?

Economists expect January prices were up 0.3% from December and 2.1% from a year ago, LPL analysts say.

Core inflation, which excludes volatile food and energy prices, should come in at 2.2% year over year when it is reported later this week.

“These numbers are important, but of even more near-term importance for those still looking for the right gift is how much more expensive common Valentine’s Day gifts have become over the last year,” explained Chief Economic Strategist John Canally, CFA, and Shawn Doty, senior analyst, in their Valentine’s Day report.

Last-minute shoppers are in luck, they say, referring to items in LPL’s Valentine’s Day Index, which tracks the costs of several gift categories over time.

Overall, Valentine’s Day prices increased by less than 1% in 2016, which is less than the 15-year average of 1.95%, the analysts point out. “The rise was also slower than headline CPI (2.1%) and core inflation (2.2%),” they explained.

Night In

An evening at home — even with candy, flowers, a home-cooked meal and a bottle of wine or champagne — could be “the best bet for value conscious” sweethearts in 2017, according to LPL research.

After seven years of price increases, the cost of a night at home dropped 1% in 2016.

“This is only the third time the price of this gift category has fallen in the history of the index, and it also ranks as the largest single-year decline in 16 years,” said Canally and Doty.

Though all of the items in this “gift basket” dropped in price, it was the cost of food that was the biggest driver, falling more than 2%.

Night Out

Dinner and a movie is a popular Valentine’s Day tradition, but this duo had a price increase of 2.6% in 2016.

Over the previous 15 years, this expense had an average yearly increase of more than 3%.

Keep in mind, that for some couples a night on the town means a meal, movie tickets and child care.

Child care expenses have the biggest price increase of any item in LPL’s Valentine’s Day Index. In fact, on a cumulative basis, this cost is up nearly 80% since 2001 — or about 4% per year.

With a gain of nearly 3% in 2016, child care expenses rose less than average last year, but they still accounted for the largest gain of any item in the gift basket, the research team says.

Got to Get Away?

Taking a trip is a relative bargain based on 2016 prices and remains “a potential winner,” according to LPL.

Prices for a getaway — including meals, hotels and airfares —  grew by just 0.5% year over year. Plus, though the total amount for a trip surpasses most other gifts, price tags for trips are definitely better deals than jewelry, the research team ways.

This is because airline fares were down nearly 5% in 2016, which is the largest year-over-year drop in price relative to any other gift in the index, the analysts point out.

Glitter & Glam

Jewelry, of course, is certainly a popular item for Valentine’s Day.

It’s become a better value, after four years of consecutive price declines from 2012 to 2015.

But in 2016, prices increased by close to 6% — making jewelry the item with the largest price jump in this year’s Valentine’s Day Index.

LPL says it set up the index to help last-minute shoppers find “the best value.”

“A night at home became cheaper during 2016, which has only happened two other times in the 16-year history of the Valentine’s Day Index, making it a better deal than dinner and a movie this year,” Canally and Doty said.

For bigger spenders, getaways are still of “reasonable value” relative to other Valentine’s Day treats.

Those looking for jewelry deals, though, seem to have “missed their opportunity.”

— Check out Americans’ Top Concern: Sex or Money? on ThinkAdvisor.

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