22nd Annual PNC Christmas Price Index up 3 Percent; Dancers, Drummers and Pipers Earn More in Tight Labor Market

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It is time once again for PNC's annual tongue-in-cheek look at the cost of the items in the holiday classic, "The Twelve Days of Christmas." This year, an expanded PNC Christmas price index web site holds resources for educators.

For years, educators have told us that they have used The Christmas Price Index as a teaching tool because it reflects trends in the broader economy

Historically low unemployment is making it more expensive to give the gift of live entertainment 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 22nd annual survey, the cost of 'The Twelve Days of Christmas' is $18,920 in 2006, a 3.1 percent increase over last year. Gift prices mirrored the U.S. government's Consumer Price Index - a widely used measure of inflation calculated by the Bureau of Labor Statistics.

Each year, the PNC Christmas Price Index provides a look at the events and news that helped shape the economy during the year. Since 1984, educators across the country have used the Christmas Price Index to teach economic trends to students of all ages. With that in mind, this year's Christmas Price Index Web site has been updated to include more interactive activities, annual results and trends, a Flash presentation, MP3 download, and much more. Educators who visit the site will also find sample lesson plans on related topics from The Stock Market GameTM (SMG) program, America's premier educational stock-market simulation.

"For years, educators have told us that they have used The Christmas Price Index as a teaching tool because it reflects trends in the broader economy," said Jeff Kleintop, chief investment strategist for PNC Wealth Management. "This year, they can tell their students that after years of stagnation, wages for skilled workers, including the song's dancers and musicians, have increased as the labor market has tightened. Also, a decline in the housing market has dampened demand for luxury goods, such as gold rings."

Other Christmas Price Index Highlights include:


    Although the largest dollar increase this year resulted from rising labor costs for the dancers and musicians, the Maids-a-Milking, who are paid the minimum wage, did not see an increase this year. Inflation since 1996 has steadily eroded the purchasing power of the $5.15 hourly minimum, which today would be worth $4.04 in 1996 dollars.

  • The Partridge's home saw the greatest increase of all the items in the index, as Pear Tree prices increased 44 percent from last year. Kleintop attributes this to increased demand for ornamental trees among commercial real estate developers.
  • True Loves will find no increase in the cost of Partridges and most other birds this year as the cost of fuel to ship them leveled off, according to The Cincinnati Zoo and Botanical Gardens.
  • Like many of the birds, the price for Gold Rings was flat compared to last year, even though the price of the raw material--gold--rose significantly. This has resulted in tighter margins for retail jewelers.

Christmas More Expensive than Ever

For Internet-savvy True Loves, PNC Wealth Management calculates the cost of The Twelve Days gifts purchased on the Web. This year, the trends identified in the traditional index are repeated in the Internet version, with overall growth of 3.4 percent, compared to 3.1 in the traditional index. Wages are up, with the Drummers earning almost 100 percent more when purchased on the Internet in 2006 compared with an Internet purchase in 2005. And, as with the traditional Christmas Price Index, bird prices are even or, in some cases, down a bit from 2005 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 - $75,122 - for all 364 items, up from $72,608 in 2005. This 3.5 percent increase is substantially less than last year's 9.5 percent increase. Kleintop observed that Christmas Price Index inflation may reflect trends that led the Federal Reserve to pause interest rate hikes this year.

The PNC Financial Services Group, Inc. (http://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.


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