Waelti: Lords-a-Leaping, Ladies Dancing, and Musicians lead Inflation Of Christmas Price Index

Inflation dominated anything to do with the economy of 2024. As always, prices of some items increased more than others. The Pandemic and its aftermath had significant effects on these changes.

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The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) tracks changes in consumer prices of goods and services over time. Since 1984 the PNC Bank of Pittsburg has constructed its own whimsical price index by tracking prices of the gifts purchased by the True Love in the song, “The Twelve Days of Christmas.”

Let’s take a look at these gift prices for 2024 and draw some comparisons of the PNC CPI to the official BLS CPI.

For the Partridge in a Pear Tree, the price of the Partridge remained stable but the price of the Pear Tree increased from $319 to $370 and change for a steep increase of 16%. Although this is the largest percentage increase of all items of the song, it is such a small portion of the total that it has only a modest effect on the total index.

The price of the Two Turtle Doves remained stable at $750.

The price of the Three French Hens increased from $330 to $346.50 for a substantial increase of 15%. But we note that these are among the least expensive gifts of the song.

The price of the Four Calling Birds remained stable at a few pennies under $600.

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As the price of gold remained stable for the second year after a run of over 5 years, our True Love could breathe a sigh of relief with the price of the Five Golden Rings holding at $1,245.

The Six Geese-a-Laying will set our True Love back for $900, a hefty 15.4% increase over the $780 of 2023.

The Seven Swans-a-Swimming have traditionally been the most volatile, and the most expensive, of all the gifts of the song. This year, they are the second most expensive of the gifts, priced at $13,125. Fortunately for the generous True Love, their price remains the same as in 2023.

The hard-working and unfortunate Eight Maids-a-Milking are still priced at a mere $58, a price that remains unchanged since 2009.

As we come to the more highly rewarded skills, the Nine Ladies Dancing received a 3% increase with $8,557 and change over the $8,308 and change of 2023.

The male dancers fared better, both in remuneration and percentage increase. Is there gender discrimination going on here? The Ten Lords-a-Leaping received $15,579 and change for a 7.2% increase over the $14,539 and change of 2023.

The Musicians did exceptionally well. The Eleven Pipers Piping received $3,715 for a 15.8% increase over the $3,207 and change of 2023.

The Twelve Drummers Drumming also enjoyed a 15.8% bump, receiving $4017 compared to their $3,468 of 2023.

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The total bill for one set of the 12 gifts comes to a hefty $49,263 and change, for a 5.4% increase over $46,730 in 2023. The 5.4% increase is compared to the BLS CPI annual increase of 2.4%.

But wait, our True Love is not yet off the hook. In the song, these gifts are given repeatedly over the twelve days. When given repeatedly, the True Love must come up with $209,272 for a 3.6 percent increase over the $201,972 of 2023.

While the gifts of the True Love in the PNC CPI are not typical gifts of the average giver and do not represent typical items covered in the BLS CPI, there are nevertheless some points regarding consumer spending habits that are instructive. Specifically, compared to the prices of goods, it is the prices of services that have disproportionately increased in the real economy just as they have in the song. The costs of the dancers and musicians in the index have increased more than the price of goods. When the PNC CPI was launched in 1984, goods comprised some 70% of the CPI while today it is only 35%, clearly reflecting trends in the real economy.

In the real world we note that the costs of restaurant meals for example, have increased dramatically. We can expect them to remain high, and possibly continue to increase.

If an instructor were using this exercise for classroom instruction on index numbers, a question to students might be, “since the prices of services have increased more than the price of goods, why is the 2024 percentage increase of the index of repeated giving higher than the percentage increase of the single set of goods?” The answer would be that it’s because the lower cost items at the beginning of the song are the ones repeatedly given more times, thus disproportionately increasing their weight in the index (while reducing the weight of the costly items) relative to the single set of gifts.

The BLS also computes a “core” index, leaving out the volatile food and gas prices. The PNC also computes a “core” CPI leaving out the usually volatile Seven Swans-a-Swimming.” By leaving out the Seven Swans-a-Swimming, the core PNC CPI would be 7.5% relative to the 5.4% of the single set and the 3.6% of the repeated set. A classroom instructor might quiz the students as to why the core index is higher than either the index of one set of gifts or the repeated set of gifts. The answer would be that by leaving out the costly swans that have remained stable in price, we have included only the items that have increased in price, thus increasing the index.

The Pandemic has clearly affected the economy, and most observers predicted that the economy would permanently be changed. 

Economists cannot predict the future, but neither can anyone else. While neither the President, nor Congress, can directly control prices, their policies nevertheless can affect them. Once prices in the aggregate rise, they seldom fall. Falling prices in the aggregate are deflationary and that does not indicate a strong economy. The Fed’s target of 2% is an economically rational target. We will all be keeping an eye on the policies that politicians pursue, policies that affect the politically toxic condition of inflation.

— John Waelti of Monroe, a retired professor of economics, can be reached at [email protected]. His column appears monthly in the Monroe Times.