Beyoncé’s effect on inflation baffles economists

Central banks should be wary of the danger of a new wave of inflation this summer. The month of June saw tense meetings of the main central banks and some of them implemented more rate hikes than expected. This is the case with the Bank of England which raised the cost of money by up to 50 basis points.

The latest readings of inflation in countries such as Great Britain and Sweden have been above expectations, especially across the Channel, inflation has interrupted its declining trend, with sharp price increases in sectors such as food, at 8.7% per year. Confirms at the % level. , transport and insurance. Sweden and Great Britain have something in common that the most observant economists missed: the early stages Beyonce’s World Renaissance Tour, who is on his way to becoming highest grossing tour of all time,
The pop star’s mega tour begins stockholm The tour continued across the Channel with four stages in Cardiff, Edinburgh, Sunderland and London on 10 and 11 May respectively (five concerts also took place in the capital with the final three in the first days of June).

Calculating the Beyoncé Effect Hard

But how could Beyonce be the potential center of inflation? “Beyoncé didn’t tour the UK in April. So how can the change in ticket prices account for record inflation? Beyoncé’s ticket price compares to the price of any concert in April. The performing artists may not be of the same caliber as Beyoncé and demand lower prices. Thus, the price hike reflects an increase in the quality of entertainment, but is booked as an outright price hike,” he explains. Paul Donovan, chief economist at UBS Global Wealth Management. Ticket prices for Beyoncé concerts have shot up to £170 per person. but it’s nothing compared to $900 cap for set steps in the United States.

This price spread has prompted some fans to look to cheaper options in Europe. The result is an increase in tourist demand, especially as it occurred closer to Beyoncé’s concerts in Stockholm, Sweden. In addition to low ticket prices, fans will also give ratings Weakness of the Swedish Krona As an added element of appeal. Sweden is clearly a case in which the effect of these events on prices may be more consistent given the limited offer of accommodation facilities to welcome tourists compared to other countries.
In Sweden, inflation (+9.7% y/o) turned out to be higher than expected in May due to a rise in hotel prices. Michael Grahn, an economist at Danske Bank, even calculated that out of the 0.3 percentage points of additional inflation linked to hotel and restaurant prices ‘results in about 0.2 percentage points’.beyonce blip, Grahn specified that this would be a short-term effect and may not alone be the reason for the high inflation, even though “the global demand for their performance and seeing their performance in Sweden clearly added something up”.

A very rare effect, but which is not exactly a novelty in Sweden; This type of inflationary effect was already seen on hotel prices 2017 Europa League Final between Ajax and Manchester United, which saw fans of both teams stay in Stockholm for a few days.

Warning to investors

As he recalls, investors from other countries are not indifferent to what happened in Sweden. Morgan Stanley, Inflation in the US, which has fallen steadily in recent months, may in fact suddenly rise again, and Sweden’s Beyoncé blip shows how that could happen. Seth Carpenter, global chief economist at Morgan Stanley, believes so US inflation may surprise markets with unexpected spike later this yearBecause till recently covid has continued to suppress demand in some sectors. And what happened in Sweden shows how much residual demand there can still be in the services sector, and where you least expect it. A Morgan Stanley economist concluded, “We should avoid getting too complacent with the Beyoncé effect.”

next steps

A counter-evidence of the Beyoncé effect will come in the coming weeks when UK inflation figures for June come in and upward pressure may persist, given that Beyoncé’s tour will continue into early June with several stops. Also this month ‘Love is on tour’ in the UK Harry Styles with seven stops including four in London. On the other hand, it will be the turn of these days in Sweden Bruce Springsteen With three stops on your tour in the city of Gothenburg.

Returning to Beyoncé, her tour has also included stops in Holland with two concerts in Amsterdam, Germany (three concerts), Spain (one concert) and Poland (two concerts) over the past few weeks. is this italy? There is no trial for Beyoncé to fly the tricolor as the artist has no Italian stops scheduled. On the other hand, leaders are Distasteful game who have already made two legs of the tour in Naples and these days are in Milan with four concerts in the San Siro setting, for the time being all tickets were sold out at prices up to 172 euros.

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