Services and gifts for the Brazilian equivalent of Valentine’s Day (Dia dos Namorados, celebrated on June 12) rose 4.78% between June 2016 and May 2017, according to FGV’s Brazilian Institute of Economics (IBRE). The price hike outpaced the Consumer Price Index (CPI) for the period, also calculated by FGV, totaling 4.05%.

The “Valentine’s Day Index” was led by a 6.14% spike in the price of services. Couples will be spending more on entertainment this Valentine’s Day, with theater recording the biggest upsurge (27.14%), followed by music concerts (12.92%) and movie theaters (6.91%). Restaurant items are also up 5.73%, while bar and diner prices leaped 6.73%. Only hotels and motels have gotten less expensive, with prices dropping 4.29%.

“Even though they have risen above inflation, these prices are starting to fall. Our current recession and its effects on the job market have been driving demand for services down, causing prices to lose some momentum,” said André Braz, CPI coordinator at IBRE.

Gift prices simmer down

On the other hand, Valentine’s Day gifts are up 2.56% – approximately 1.5 percentage points under inflation for the period. Apparel prices recorded the steepest drop: women’s clothing prices are down 0.66% from last year. Men’s clothing (2.66%), women’s footwear (3.43%) and men’s footwear (4.40%) also rose less sharply than services.

Mobile phones have gotten 5.16% cheaper since last June, as have cameras (-1.15%). Computers and peripherals, in turn, were up 1.92%. “Gifts did not go up as much as other items, but they usually cost more anyway. For example, mobile phones are down this year, but a good smartphone can go for more than BRL 1,000. People often rely on payment plans when purchasing these items, but even though interest rates are declining, unemployment has been holding back sales of more expensive goods,” said Braz.

According to the coordinator, this is not the best time to take on debt. “Given the state of the economy, only consumers who can afford to pay cash should take advantage of these lower prices. By committing to payment plans, people end up tying up some of their income in the long term, and the job market is not favorable for long-term debt right now. Default rates rise as unemployment goes up, which is keeping consumer interest rates from dropping more sharply”.