Global themes for 2025 By Investing.com

Investing.com — RBC Capital sees a challenging year ahead for consumer markets in 2025, highlighting financial pressures from high inflation, rising rates, and unemployment in a research note this week. 

The firm’s global report emphasized several key trends shaping the consumer staples sector.

A Challenging Consumer Environment: The bank said its analysts largely share the belief that the health of global consumers “has come under material financial pressure as the effects of higher rates, unemployment, and elevated inflationary pressures weigh on fundamentals across the consumer landscape.”

They expect this dynamic to continue in the near term.

Value-Oriented Behavior Dominates: With economic pressures persisting, RBC said consumers are gravitating toward private-label products, smaller basket sizes, and discount channels. 

They add that globally, there’s a preference for value-based spending, including at-home dining and budget-friendly restaurant meals.

Focus on Volume Growth: Organic growth is expected to hinge on volume rather than pricing as inflationary pressures ease and promotional spending rises. RBC analysts suggest this dynamic will significantly influence stock performance.

Geopolitical and Regulatory Challenges: The second Trump administration may introduce new tariffs, adding cost pressures that could disrupt growth, according to RBC. 

Additionally, geopolitical headwinds, particularly in China and Latin America, are expected to weigh on consumer sentiment. “We see a host of geopolitical factors at play including (but not limited to) ongoing weakness in China, Middle East, and potentially slower growth in Europe & Latin America (Mexico and Brazil have showed signs of slower growth),” stated RBC.

Margin Pressures: RBC believes balancing profitability will be critical as demand moderates and input costs fluctuate. Increased promotional activity and the need for higher marketing spend will also impact margins.

China’s Trajectory: “While the region has dealt with challenging trends for several years now, consumer sentiment remains sluggish and trends have lagged expectations, particularly in the back half of 2024,” stated RBC. 

The bank added that categories growth trajectories in the region remain underwhelming, and it expects sequential improvement, but overall, its analysts agree it will “take time before the region becomes a meaningful growth driver,” while they have yet to see government stimulus materially impact spending.

Potential for M&A Activity: As organic growth becomes harder to achieve, RBC predicts mergers and acquisitions could play a larger role, especially if interest rates improve in the latter half of 2025.