Rising Wages For Milkmaids, Higher Commodity Prices Lead Increases
- Cost of “Twelve Days of Christmas” Song Items Reflect Consumer Pricing Trends -
The significantly higher price of gold and increased compensation for minimum wage workers will make Christmas more expensive this year, according to the PNC Christmas Price Index. The tongue-in-cheek economic analysis by PNC Wealth Management is based on the cost of gifts in the holiday classic, “The Twelve Days of Christmas.”
According to the 23rd annual survey, the cost of “The Twelve Days of Christmas” is $19,507 in 2007, a 3.1 percent increase over last year. The rise in gift prices mirrored the U.S. government’s Consumer Price Index – a widely used measure of inflation calculated by the Bureau of Labor Statistics. The Consumer Price Index is up 3.5 percent so far this year.
“Each year, the Christmas Price Index reflects trends in the broader economy,” said James Dunigan, managing executive of investments for PNC Wealth Management. “This year, increased commodities prices, concerns about the value of the dollar and the first minimum wage increase in 10 years were major factors in the increases to the Christmas Price Index.”
“Ringing” in a Pricier New Year
True Loves will have to pay a bit more for the five Gold Rings this year, as the jewelers who provide the prices for the rings report having no choice but to pass increased prices along to consumers as the price of gold continues to rise.
“The cost of the Gold Rings in this year’s Christmas Price Index reflects the general trend of increasing commodity prices in the Consumer Price Index, including gold,” said Dunigan. “In addition, increased fears about inflation and the value of the dollar may have led investors to turn to gold as a safer place to invest their money.”
The price of five gold rings now totals $395, a 21.5 percent increase over 2006 prices, but still nowhere close to 1989 prices, when the five Gold Rings hit an all-time high of $750.
Milkmaids Benefit from Minimum Wage Increase
As the only unskilled laborers in the Christmas Price Index, the eight Maids-a-Milking make minimum wage, and have not had a raise since 1997. This year, Congress increased their wages by 13.6 percent; bringing the cost of eight Maids-a-Milking for one hour of work to $46.80. The True Love will have to reach deeper into his pockets for the milkmaids in 2008 and 2009, as well - Congress has already approved continued increases to the minimum wage for the next two years.
The cost of most performers in the index — the Drummers Drumming, Pipers Piping and Lords-a-Leaping — rose a modest 3 to 4 percent, due primarily to an increase in the performers’ compensation, reflecting the current labor market in which the unemployment rate is still below 5 percent. Only the price for the Ladies Dancing was unchanged this year, according to Philadanco, a modern dance company in Philadelphia.
Food Prices Are For the Birds
Among the feathered friends in the Christmas Price Index, the most notable increase was a 20 percent change in the price for six Geese-a-Laying, provided by the National Aviary.
“For True Loves planning to serve a Christmas goose - or six - for a holiday meal, this item will be a bit more expensive,” said Dunigan. “Food prices have increased over the last year, which has not impacted birds like Turtle Doves and Partridges, but has had an impact on birds traditionally served as food, like Geese.”
Most of the other bird prices in the index remained even with last year’s rates, thanks to steady supply and demand for Partridges, Turtle Doves, French Hens and Swans. Aside from the Geese-a-Laying, only the Calling Birds will cost more in 2007. PNC prices the Calling Birds from a national pet store chain, and prices for Calling Birds (or canaries) were up 25 percent this year, thanks to higher demand and increased shipping costs for retailers.
2007: Most Expensive Christmas Ever
For those True Loves who prefer to do their shopping online, PNC Wealth Management calculates the cost of The Twelve Days of Christmas gifts purchased on the Web. This year, the trends identified in the traditional index are repeated in the Internet version, with overall growth of 3 percent, very close to the 3.1 percent in the traditional index. This year, the Internet index is very similar to the traditional index. For example, the price of gold is significantly higher online in 2007 compared to 2006. And, as with the traditional Christmas Price Index, bird prices are mostly even with or, in some cases, down a bit from 2006 levels. In general, Internet prices are higher than their non-Internet counterparts because of shipping costs.
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. This holiday season, very generous True Loves will pay more than ever before – $78,100 — for all 364 items, up from $75,122 in 2006. This 4 percent increase is about even with last year’s 3.5 percent increase.
Special Present: Updated Web Site
For a historical look at PNC’s Index, please visit our updated Web site at www.pncchristmaspriceindex.com. Each year, educators across the country use the Christmas Price Index to teach economic trends to students of all ages. With that in mind, this year’s site has been updated to include interactive activities, annual results and trends, a Flash presentation, MP3 download, games and much more. New this year, Jim Dunigan will present a live chat about this year’s results on Dec 18, 2007.
Educators who visit the site will also find sample lesson plans on the Christmas Price Index from The Stock Market GameTM (SMG) program, America’s premier educational stock-market simulation. Available in all 50 states for grades 4-12, the SMG program teaches children core academic and investment skills. Individually, or in teams, students invest a hypothetical $100,000 portfolio, choosing equities and mutual funds over a 10-15 week period.
The PNC Financial Services Group, Inc. (www.pnc.com) is one of the nation’s largest diversified financial services organizations providing retail and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.
2007 Christmas Price Index:
Special Thanks to The PNC