2018 Halloween candy prices are spooktacular

Americans are expected to drop billions of dollars on candy, costumes, and other ghoulish goods and goodies for Halloween. Spending on Halloween candy is forecast to rise 4.2%, a bigger jump than last year's 2.4% gain, but a pale shadow of 2016's monstrous 7.6% gain. We forecast Americans to scare up $2.5 billion to spend on Halloween candy this year, the most ever, which would spell $20.10 per household. (IHS Markit defines Halloween candy price growth as the monthly change in the October not-seasonally-adjusted Consumer Price Index for candy and chewing gum, and we define Halloween candy spending as estimated October seasonally adjusted personal consumption expenditures on candy and chewing gum.)

Halloween candy prices this October are expected to be jolted back to life amid the specter of a global sugar price surge. Halloween candy price increases were frightful between 2005 and 2011, when they swelled at paces of more than 2% each year, but more recently candy inflation has been put on ice. For the past two Halloweens, candy prices have been underwater - much to the delight of little witches, goblins, and ghosts.

We expect Halloween candy price inflation to rise from the dead. The global price of raw sugar has swollen 40% over the last month, thanks in part to declining Brazilian production. However, US prices are somewhat protected from this volatility. In addition, cocoa bean supplies were stated in September to be higher than previously reported, putting downward pressure on cocoa bean prices in the third quarter. All told, IHS Markit forecasts a Halloween candy price increase of only 0.5% year-on-year-not too scary after all.

Candy spending growth in the last several years has bumped around like a hayride. It was moderately depressed in 2012 and 2013 due to special factors including Hurricane Sandy in 2012 and a federal government shutdown in 2013. Halloween candy spending went on a spree in 2014 (up 6.4%), then couldn't keep it up in 2015 (up 3.1%). When 2016 came rolling around, a 1.2% plunge in candy prices shot spending into the stratosphere with a 7.6% leap over the year before. That was another hard act to follow and 2017's bare-bones 2.4% increase didn't turn any heads around.

This year Halloween candy spending is likely to be propped up by elevated consumer confidence, strong employment markets, and real disposable income growth - although several headwinds have surfaced recently, including volatility in the stock market and creeping pump prices. Still, positive forces should push Americans to splurge on treats this year despite the rising Halloween candy prices. We expect an animated 4.2% year-over-year increase in Halloween candy spending, bringing the total to $2.5 billion.

Trick or treat?

This year, the cost of a treat is going up, but consumers aren't scared. Still-high consumer confidence and strong disposable income growth mean that consumers will likely burn some extra cash on sweet treats. After all, we have known for years that the customary declaration "trick or treat" is just lip service.