Tuesday, December 15, 2009

Twelve days to Christmas. And you'll be spending...

$US21,466 - just  $386 more than the year before.

PNC Wealth Management also calculate the "True Cost of Christmas" - the cumulative cost of all the gifts counting each repetition, reflects the cost of 364 gifts. It's $87,402 this year.

As the chart below the fold illustrates the Seven Swans-a-Swimming traditionally make up the bulk of the cost - this year they're pricey at $5250, but beaten for the first time by the Nine Ladies Dancing at $5473.

Here's what I wrote on a Christmas past:

Most years the index has moved up in line with the general rate of US inflation – a finding that might seem odd. Pipers piping, partridges and pear trees aren’t the sort of things that usually make their way into the consumer price index.

But it has been found time and time again that unless a shopping list is extremely obscure its total will usually move in line with prices in general...

The best example is the price of a Big Mac.

We think of a hamburger as one product, but actually it is its own shopping list containing within it labour, rent, electricity, farm produce and so on.

When, noting its standardised nature, the Economist magazine began (as a joke) comparing price movements in Big Macs across nations it discovered that they closely tracked more complicated measures of prices.

That’s because if ever one part of a big Mac was to became especially expensive people would buy fewer of them, their price would moderate and the prices of things people spent their money on would climb.

The other thing that PNC has discovered about the Twelve Days shopping list is that the importance of goods and services has changed places.

Goods (in this case birds and trees) used to account for most of the cost.

These days it’s the services that cost the money. The lords a leaping (sourced from the Pennsylvania Ballet) get ever more expensive.

Goods have become relatively cheap to source. We have become so much better at making them. But in Western countries we have paid ourselves more as well.

That’s why it’s the personal things - be they pipers piping, ladies dancing, or any service that requires face-to-face contact - that have become valued and rather more rare.

PNC Christmas Price Index Chart

Related Posts

. Scroogenomics - the Christmas debate writ large

. Might we spend even more this Christmas?

. Do you think the CPI is a joke?