Inflation Explained by the 12 Days of Christmas

In my data driven world, I’ve been pouring over information that I believe suggests that inflation is coming down the pike. I wanted to talk about these reports and provide different arguments about their results; but frankly, I think that would have bored you to pieces.

Instead, I thought I should play the role of a jovial analyst, and present to you some information about inflation in the context of one of our favorite carols, “The Twelve Days of Christmas.” Unless you’ve lived under a rock your entire life, you understand the song talks about 12 cumulative gifts one gives to their true love: 12 drummers drumming, 11 pipers piping, 10 lords a-leaping, 8 maids a-milking, 7 swans a-swimming, 6 geese a-laying, 5 gold rings, 4 calling birds, 3 French hens, 2 turtle doves and a partridge in a pear tree.

Why are there 12 days of Christmas? I have no clue.

PNC Bank has surmised a “Christmas Price Index” which tracks how much these 12 gifts cost and how their prices change throughout the year. It appears the “price of Christmas” per the 12 gifts has increased roughly 2.1% since last year. The year over year average increase for the past thirty years has been roughly 2.8% annually. Below a chart tracks these changes on an annual basis through 2009 to give you some idea of how it has changed:

So how does PNC determine the price of each of the 12 gifts? The price of each item is set as follows:

·         The pear tree comes from a local Philadelphia nursery.

·         The partridge, turtle dove, and French hen prices are determined by the Cincinnati Zoo and Botanical Garden.

·         The price of a canary at Petco is used for the calling bird, though the price of a blackbird (colly bird) may reflect the original version of the song.

·         Gordon Jewelers sets the cost of the gold rings, though the gold rings of the song may actually refer to ring-necked pheasants.

·         The maids are assumed to be unskilled laborers earning the federal minimum wage.

·         A Philadelphia dance company provides estimates for the salary of "ladies dancing.”

·         The Philadelphia Ballet estimates the salary for the "leaping lords.”

·         The going-rate for drummers and pipers is that of a Pennsylvania musicians' union.

And of course, like all fun things in life, there are people that just take it too seriously and find ways to be critical about how the index is contrived. Some have complained that the index falls short of good scientific analysis, despite it not being designed for any true scientific purpose.

Critics note that the “eight maids a-milking” isn’t well defined, so only the maids are counted; whereas, some might argue the cost of the cow should be included too. There is also the issue of prices of some gifts being provided by only one store, where a better way to do this is to look for similar product costs that should be averaged over many stores. And lastly, there is even a complaint that ballet dancers are not true substitutes for real lords a-leaping.

Whether or not you buy into the Christmas index, I think most of us agree these gifts would be somewhat unusual by 21st century standards. As for me, I would happily accept a little more peace on Earth. Or even, a little more peace at home, which itself is likely a tall and priceless order.