The K-shaped economy is reshaping Valentine's Day spending

• Spending on Valentine's Day is facing pressure from rising prices, affecting plans.
• Higher earners are sustaining spending, while lower earners are struggling.
• For some, that might mean budget flowers and a movie at home this Valentine's Day.

Even Valentine's Day might not be immune to the economy's uneven tilt this year. Take it from the beloved Valentine's candy hearts: In addition to traditional messages like "KISS ME" and "LOVE BUG," the treats are now imploring you to be financially responsible and "SPLIT RENT" or "COOK FOR 2."

Those looking to pamper their paramours might have good reason to worry about a costly holiday. A new report from Groundwork Collaborative and The Century Foundation, using January data from consumer data-tracking firm NIQ, showed the prices of common Valentine's Day items, including roses and chocolates, have surged from a year ago.

The following chart shows what they found:

Broader inflation figures also suggest a pricier date this year. Overall inflation, based on the year-over-year percent change in the consumer price index, has remained higher than ideal but down from its 9.1% peak in June 2022, coming in at 2.7% in December. However, a lot of Valentine's Day staples have spiked: The candy and chewing gum price index increased 10% from a year ago in December, indoor plants and flowers increased 7.2%, and food away from home increased 4.1%.

It's another outgrowth of the K-shaped economy, where higher earners are doing OK, and everyone else is floundering. Those higher earners are propping up spending, even as lower- and middle-income consumers are struggling — and that could extend to Valentine's Day plans.

Elizabeth Pancotti, the managing director of policy and advocacy at Groundwork Collaborative, said that, this Valentine's Day, the country could see a group of high-end consumers who are "looking at their 401(k) balances and their brokerages, and they're seeing stock prices up, and they feel pretty good about the economy." The higher earners — those who sit at the top of the K — might be buying their paramours ever-valuable gold and luxury goods.

"The rest of us are scraping by with the budget bouquet instead of the dozen roses, or not going out for dinner," Pancotti said. Groundwork Collaborative and The Century Foundation's report showed that the price of a rose bouquet has increased by about 17% in January from a year ago to about $13.

The divide in spending seems to be stretching in both directions. The BMO Real Financial Progress Index, using data collected in late December through most of January, showed slight upticks from a year ago in the share of Americans who said the average date costs at least $300 and those who said it costs them nothing.

"Responses to the increasingly steep price of going out are leading to what looks like a K-shaped dating economy," Paul Dilda, head of US consumer strategy at BMO, said in a press release. "At one end, people are slashing dating expenses entirely, either by skipping date night or by swapping the restaurant for a home cooked meal and the movie tickets for popcorn on the couch. On the other, some are deciding an expensive date is worth the dent in their wallets."

A cheaper Valentine's Day for many

For many Americans, this might be a Valentine's Day spent at home on the couch. Google searches for "valentine's day activities at home" reached their highest recorded levels last February, when high costs were already biting at consumers; searches have already started ticking up again.

Even a celebratory sweet treat might be out of grasp for lower earners: Most of the chocolate for Valentine's Day was produced when cocoa was "still extremely expensive," said David Branch, sector manager at the Wells Fargo Agri-Food Institute. He thinks price stabilization could happen by the middle of the year, perhaps in time for Halloween, but not in time for the coming holiday.

And those who are going out might be seeking out more deals — and some chains are meeting the K-shaped moment. TGI Fridays, for instance, is offering its own $50 three-course Valentine's deal.

"Celebrations are at the heart of TGI Fridays, and Valentine's Day has always been one of our biggest celebration days of the year," Lauren Perez, the senior vice president of Global Marketing at TGI Fridays, said in a statement. "Our three-course Valentine's Meal for Two offers our guests an incredible value and a chance to celebrate with the ones they love."

You could also celebrate the holiday among some moderately priced home goods and furniture: Some Ikea locations are offering special Valentine's dinner-for-two deals, and the chain will also have a kids-eat-free offer from the 14th through the 16th.

"This year's strong interest in IKEA Valentine's Deals reflects that regardless of income level, people are prioritizing value," Lisa Ford, commercial food manager at Ikea US, said. "While IKEA shoppers have varying income, we know more people are seeking smart spending and experiences that feel worth it."

Of course, many Americans are still prepped to shell out, even if those expenditures remain uneven. The National Retail Federation expects it will be a record-breaking year, with $29.1 billion in spending.

"Much of that growth is driven by middle- and high-income shoppers who are expanding their gift lists to include friends, co-workers and even pets in addition to loved ones," Katherine Cullen, the vice president of industry and consumer insights at the National Retail Federation, said in a press release.

For some lovebirds, it might involve more strategic spending than in years past.

For 24-year-old Charlize Alcaraz, Valentine's Day will be quieter than the extravagant vacations she and her boyfriend have previously taken to mark the holiday. This year, they consolidated their late January anniversary dinner with Valentine's Day; come the 14th, they'll likely throw on a movie and open a wine bottle.

"For our anniversary, we didn't do any gifts at all," Alcaraz, who works in public relations in Toronto, said. "In previous years, we would do a $200 Canadian budget for each of us to give something nice to one another, but now we both agreed that we really just want to save money. The dinner itself is a gift for each other."