The Index is based on the gifts mentioned in the classic holiday song, “The Twelve Days of Christmas.” The price tag for the PNC CPI is $27,393.17 in 2013, which is $1,192 more than last year and the largest increase since 2010, when the index jumped 9.2%.
The CPI was first done in 1984. Since then, it has risen 116%, while inflation is up 122% over the same period. But an even more intriguing fact emerged, says Jim Dunigan, managing executive, Investments of PNC Wealth Management. “While there are exceptions in given years, what’s most interesting about the index’s history is that since the beginning, year-over-year increases have averaged 2.9%, which is exactly the same number as the U.S. inflation index,” he says.
This year, the PNC CPI’s increase outpaced the government’s Consumer Price Index, which stands at 1% for the past 12 months through September. The core index, removing volatile food and energy prices, is uncharacteristically higher at 1.7%.
“We were surprised to see such a large increase from a year ago, given the overall benign inflation rate in the U.S., but the dancers in the index took a huge leap this year to play catch up from paltry increases the previous few years,” says Dunigan.
Nine Ladies Dancing increased 20% this year, while 10 Lords-a-Leaping jumped 10%, combining for a $1,736 increase from 2012.
As part of its annual tradition, PNC Wealth Management also tabulates the “True Cost of Christmas,” which is the total cost of items gifted by a True Love who repeats all of the song’s verses. Very thoughtful True Loves must produce $114,651.18 for all 364 gifts, a slightly more “reasonable” increase of 6.9% increase compared to last year.
Much like the government’s Consumer Price Index, the PNC CPI also measures a core index—up an even more dramatic 10.6% this year—that excludes the Seven Swans-a-Swimming, which tend to be the most volatile in the index. This year, the swans remained steady from 2012 at $7,000, which is also the same price they cost in 1984, the first year of the index.
Other findings from the Christmas Price Index include:
- Seven items (A Partridge in a Pear Tree, Two Turtle Doves, Three French Hens, Five Gold Rings, Six Geese-a-Laying, Seven Swans-a-Swimming and Eight Maids-A-Milking) remained the same price as last year;
- The prices for 11 Pipers Piping ($2,635.20) and 12 Drummers Drumming ($2,854.80) advanced minimally this year, with both up just 2.9%;
- While housing prices in the general economy have been on the upswing, the PNC CPI splintered that trend as the Pear Tree dropped in price by 3.2%, down to $184.00. This is the only item in the index to drop in price this year; and
- As the only unskilled laborers in the PNC CPI, the price for the Eight Maids-a-Milking is represented by the minimum wage. With the federal minimum wage flat at $7.25 per hour, hiring the maids this year will not increase labor costs.
The PNC CPI’s sources include retailers, the National Aviary in Pittsburgh and the Philadelphia-based PHILADANCO and Pennsylvania Ballet Company.
Cyber Prices for True Loves
For those True Loves who prefer the convenience of shopping online, PNC Wealth Management also calculates the cost of “The Twelve Days of Christmas” gifts purchased on the Internet.
This year, the trends identified in the traditional index are not repeated in the Internet version. However, True Loves will pay a grand total of $39.762.61 to buy the items online, a drop of 1.7% from last year, yet still $12,300 more than buying in person.
“In general, Internet prices are higher than their non-Internet counterparts because of premium shipping costs for birds and the convenience factor of shopping online,” says Dunigan.
Teaching Economic Trends
Each year, educators across the country use the PNC Christmas Price Index to teach economic trends to middle and high school students. With that in mind, this year’s site includes interactive activities, annual results and PNC CPI trends in a Flash presentation, MP3 downloads and much more.
Educators who visit the site will also find lesson plans on the Christmas Price Index from The Stock Market Game, a program of the Securities Industry and Financial Markets Association Foundation for Investor Education. The enhanced activities are specially designed to help students identify economic trends and to project their impact on this year’s index, giving them the opportunity to make predictions and check their success against actual results. Available in all 50 states for grades 4 to12, the game teaches children core academic and investment skills.
A historical look at PNC’s index can be seen here http://www.pncchristmaspriceindex.com/preload. The website includes an interactive experience where visitors can “build” all 12 gifts online, also allowing users to enter a drawing to win a 3-D printed version of their custom toy, delivered to their home in time for Christmas.