Trick or Treat 2017: Halloween candy prices & spending

• IHS Markit is forecasting 2017 Halloween candy prices to drop 0.9% compared to last year, for the second Halloween candy price drop in a row. (We define Halloween candy prices as the October not seasonally adjusted Consumer Price Index for candy and chewing gum.)
• Halloween candy spending is expected to rise 4.1% compared to last year, reaching a total of $4.1 billion, not as strong as last year's whopper of a 5.4% gain, but very respectable nonetheless. (We define Halloween candy spending as estimated October seasonally adjusted personal consumption expenditures on candy and chewing gum.)

Americans are likely to spend billions of dollars on Halloween candy, costumes, and other types of creepy-crawly commodities this year. Spending on Halloween candy is expected to increase by 4.1% this October, not as strong a showing as last year's ghostbuster rate of 5.4% but still respectable. We expect Halloween candy spending to reach $4.1 billion this year, or $32.60 per (haunted) household.

Halloween candy spending growth was rather muted in 2012 (up 2.2%) and 2013 (up 1.9%) due to special negative circumstances. In 2012, Hurricane Sandy shrieked into town in late October, impacting 24 states. In 2013, the federal government shutdown in the first half of October put a dark cloud over the run-up to Halloween season. Halloween candy spending came screaming back to life in 2014 (up 6.2%), then had a more sedate showing in 2015 (up 3.7%) due to payback from 2014 and a surge in Halloween candy prices (which shot up 3.8%). When 2016 came rolling around, another Halloween candy spending surge was in the works, boosted further by a plunge in Halloween candy prices (which were down 1.2%).

Halloween prices were very scary between 2005 and 2011, creeping up at a formidable pace of more than 2% each year. Between 2012 and 2014, Halloween candy price inflation floated in the -0.9% to 0.8% range, but it was jolted back to life in 2015 as global raw sugar and refined sugar beet prices and US cocoa powder prices rose. In 2015, Halloween candy prices increased 3.8% on a year-over-year basis.

This year's Halloween prices will not be scary. IHS Markit is forecasting 2017 Halloween candy prices to drop 0.9% compared to last year, in the second Halloween candy price drop in a row. Global cocoa production in both 2016 and 2017 experienced large improvements over each previous year with especially good, and in some cases record, production from major producers in West Africa. This created downward pressure on cocoa bean prices in 2017. For example, the September cocoa bean price fell by nearly 1/3 from its September 2016 level, with cocoa derivative prices (e.g. cocoa paste, cocoa butter and cocoa powder) also softening in 2017 - making it easier to add more chocolate to the kids' treat bags this Halloween.

The usual trick for getting even less pricey treats is to hold out until this Wednesday (November 1st) when many grocery stores are likely to slash candy prices even further.

So: Trick or Treat? This year, the cost of a treat is considerably cheaper than a trick - implying higher demand for treats than tricks. Consumer confidence is riding high, so consumers are likely to splurge a little more on edible goodies. Treats have been outpacing tricks for many years, and according to our extensive research on the ground, many Trick or Treaters are not being very earnest with their customary declaration "Trick or Treat".

Chris G. Christopher, Jr. is the Executive Director of US Macro, Global Economics, and Consumer Markets for IHS Markit.
Posted 27 October 2017