The PNC Christmas Price Index® shows the current cost for one set of each of the gifts given in the song "The Twelve Days of Christmas."
It began 28 years ago when the chief economist at PNC Bank decided to figure out how much it would cost to buy each of the gifts. Little did he know, he was starting an economic tradition that continues to this day.
The PNC Christmas Price Index® is similar to the Consumer Price Index, which measures changes in prices of goods and services like housing, food, clothing, transportation, and
more that reflect the spending habits of the average American.
The goods and services in the PNC Christmas Price Index® are far more whimsical. And most years, the price changes closely mirror those in the Consumer Price Index. It's a fun way to measure consumer spending and trends in the economy. So even if "pipers piping" or "geese a-laying" didn't make your gift list, you can still learn a lot by checking out how their prices have gone up and down over the years.
It all started 28 years ago as a way to engage clients of PNC's predecessor, Provident Bank, during the traditionally light holiday weeks. What hatched as the creative brainchild of the bank's then chief economist has since grown into one of PNC's most popular and anticipated economic reports.
TRENDS: HOW THE INDEX HAS CHANGED SINCE 1984
Over the years, trends have emerged, and the PNC Christmas Price Index® (CPI) has often increased or decreased at a rate consistent with the other CPI, the Consumer Price Index, a measure of inflation produced by the U.S. Department of Labor.
Three factors have largely driven changes in the index over the past 28 years:
In his role as managing executive of investments for The PNC Financial Services Group, James Dunigan is responsible for the investment strategy, equity research, equity management, investment services and investment advisor research groups for the open architecture platform of PNC Wealth Management. Dunigan is also responsible for the development and execution of investment policies, strategies and tactics.
Rebekah McCahan serves as a member of the Investment Strategy team for PNC Wealth Management and Institutional Investments. She is responsible for developing asset allocation models, directing asset allocation changes, analyzing new investment instruments for consideration in client accounts, and helping to create quarterly and monthly investment outlooks and reviews. She is also responsible for gathering prices for the annual PNC Christmas Price Index®.
Bill Stone is senior vice president and chief investment strategist for The PNC Financial Services Group. He is responsible for leading PNC's Investment Strategy team of analysts in monitoring many factors that influence the direction of domestic and international financial markets. He is responsible for defining the asset allocations and portfolio strategies throughout the organization to advise individual and institutional investors.
This year, the National Aviary in Pittsburgh provided the cost of some of the birds in the song, including the partridge, doves, geese and swans. National pet chain PetSmart provided the price of the calling birds, or canaries.
The pear tree price came from Waterloo Gardens, a Philadelphia nursery. Gordon's Jewelers provided the cost of five 14-carat gold rings, and Philadanco, a modern dance company in Philadelphia, offered the price of ladies dancing. The Pennsylvania Ballet gave the price of the lords a-leaping. Prices for the musicians in the song "the drummers and pipers "were provided by a Pennsylvania musicians union.
Lastly, maids a-milking are the only unskilled laborers in the Index, and as such, they reflect the minimum wage.
Year after year, the sources for the prices remain the same for the most part to ensure consistency, but they have changed on occasion due to changes in the market or business landscape.
Many things. First off, the Internet. Today, it's easier for us to find the goods and services listed in the song online. This convenience comes at a price, however: Goods and services from the survey that are purchased online tend to be more expensive than those purchased in a more traditional transaction, mainly due to added shipping and handling costs.
Second, over the last 28 years, the price of services in general has increased, while the price of goods has slowed. In the 1984 PNC Christmas Price Index¬®, goods were by far the more expensive component of the Index "today it's services. The cost of entertainment, in particular, has greatly increased over the last 25 years. As a result, the nine ladies dancing have seen a 300% increase in performance fees.
Also related to services, in 2007, federal laws increased the minimum wage and gave the maids a-milking their first raise since 1997. The wage increased again in both 2008 and 2009, and is now holding steady at $7.25 per hour.
Third, fuel costs. As fuel prices go up and down, they have a major effect on the cost of shipping and, as we all know, 2011 has been an especially volatile year.
Looks like it, but that's because inflation usually makes the PNC Christmas Price Index¬® a little more expensive each year. The underlying inflation in this year's core PNC CPI (where the volatile cost of swans is excluded) is benign: up only 0.7%. The True Cost of Christmas (the cumulative cost of all the gifts when you count each repetition in the song) measured even wider fluctuations over the years. In 2003 we had the largest jump in our history, 16.0%. Although this year's increase of 4.4% is not as dramatic, it is the most expensive year ever at $101,119.84 "higher than last year by $823.80
We appreciate your feedback. Please complete the following form, and we will make every effort to respond as quickly as possible. Note: For questions about your PNC account, please visit pnc.com.
Thanks for sharing your thoughts with us. We will review and get back to you as soon as possible.
PNC is proud to continue this tradition of educating students of all ages on the basic principles of economic fluctuation.
Dear Educators and Students:
Each year, the PNC Christmas Price Index® is used in classrooms as an entertaining, simple way to introduce basic economic concepts. The change in the prices of Christmas gifts, year after year, provides an excellent lesson on inflation and other economic trends. Plus, similarities to the U.S. Consumer Price Index make it a fun and easy way to study economic indicators.
For 2011, PNC has created a website with a magical train journey to help deliver the information. The updated site includes several pages of animated gifts, an interactive chart and an explanation of how the PNC Christmas Price Index® was determined.
These self-contained activities from The Stock Market Game™ give you everything you need to use the PNC Christmas Price Index® as an effective teaching tool.
The Stock Market Game‚ĄĘ, a program of the SIFMA Foundation for Investor Education (www.sifma.org/education), is a 501(c)3 educational organization dedicated to fostering knowledge and understanding of the financial markets for individuals of all backgrounds.
About PNC Bank
The PNC Financial Services Group, Inc. ("PNC") provides investment and wealth management, fiduciary services, FDIC-insured banking products and services and lending and borrowing of funds through its subsidiary, PNC Bank, National Association, which is a Member FDIC, and provides certain fiduciary and agency services through PNC Delaware Trust Company. PNC does not provide legal, tax or accounting advice.
Questions or comments? Email our media contacts.