When we got back to the city Saturday night, we saw a raft of Christmas decorations that weren’t there when we left on Wednesday. We’re now in that mad dash to the 25th, during which we’ll be inundated by songs, shopping promotions and cable news pundits claiming that there’s actually a ‘war on Christmas’ because certain retailers put up secularized signs that say “Happy Holidays” or “Seasons Greetings”.
And today another tradition: PNC Bank’s Christmas Price Index, which tallies the cost of buying all the items in the 12 Days of Christmas. The headlines are dramatic — a 10.9% increase! Inflation, really!? We thought that was now the least of our concern.
But massage the numbers just right, and a more deflationary picture emerges. PNC itself notes that if you exclude a dramatic spike in the cost of Swans-a-Swimming, the index grew by just 1.1%:
The seven swans a-swimming proved to be a driver of this year’s index, carrying the greatest weight with a whopping 33.3 per cent increase due to their scarcity. True Loves will spend $5,600 this year for Swans compared with $4,200 in 2007, accounting for $1,400 of the $1,573 increase. The swans typically have the largest swings in price in the PNC CPI.
Much like the government’s CPI, the PNC CPI also measures a “Core Index”—up just 1.1 per cent this year – that excludes the swans. The core Consumer Price Index excludes volatile energy and food costs and is generally lower than the headline figure.
But then strip out labour costs — overall incomes continue to rise modestly — and there are several areas of decline:
True Loves will pay less for the five gold rings this year. Retail prices dropped by 11.4 per cent (to $349.95 from $395) as retailers are trying to move luxury merchandise in light of concerns with the slowing economy, PNC found.
Two other costs in the CPI dropped this year: three French hens and Six geese-a-laying. This year the hens cost $30, a drop of 33.3 per cent over last year, and the geese cost $240, falling one-third. Four calling birds remained steady, costing $599.96, the same as a year ago.
The normal CPI is showing mixed signs… prices are starting to creak though the core is still positive. Unfortunately, we’re pretty sure PNC doesn’t do this for Q1, Q2 or Q3, so we might not get a good deflation reading on the 12 Days of Christmas until, well, next Christmas, at which point it might be too late.
CPI Drops Sparking Deflation Panic
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