2013 Christmas Price Index

A steadily improving economy helped prompt a 7.7 percent boost in the 2013 PNC Christmas Price Index(R) , the 30(th) annual tongue-in-cheek economic analysis by PNC Wealth Management.

Based on the array of gifts in the holiday classic, "The Twelve Days of Christmas," the price tag for the PNC CPI is $27,393.17 in 2013, $1,192 more than last year and the largest increase since 2010 when the index jumped 9.2 percent.

Launched in 1984 by the chief economist at a PNC predecessor bank in Philadelphia, the PNC CPI is 116 percent higher this year than when it all began, while inflation is up 122 percent over the same period. But an even more intriguing fact emerged, according to Jim Dunigan, managing executive, Investments of PNC Wealth Management.

"While there are exceptions in given years, what's most interesting about the index's history is that since the beginning, year-over-year increases have averaged 2.9 percent, which is exactly the same number as the U.S. inflation index," he said.

This year, the PNC CPI's increase outpaced the government's Consumer Price Index, which stands at 1.0 percent for the past 12 months through September. The core index, removing volatile food and energy prices, is uncharacteristically higher at 1.7 percent.

"We were surprised to see such a large increase from a year ago, given the overall benign inflation rate in the U.S., but the dancers in the index took a huge leap this year to play catch up from paltry increases the previous few years," Dunigan said.

Nine Ladies Dancing vaulted with a 20 percent this year, while Lords-a-Leaping jumped 10 percent, combining for a $1,736 increase from 2012.

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. Very thoughtful True Loves must fork over $114,651.18 for all 364 gifts, a slightly more "reasonable" increase of 6.9 percent increase compared to last year.

Much like the government's CPI, the PNC CPI also measures a Core Index -- up an even more dramatic 10.6 percent this year - that excludes the Swans, which tend to be the most volatile in the index. This year, however the swans remained steady from 2012 at $7,000, which is also the same price they cost in 1984, the first year of the index.

Other Key Components Include:

  -- Seven items: the Partridge, Two Turtle Doves, Three French Hens, Five

      Gold Rings, Six Geese-a-Laying, Seven Swans-a-Swimming and Eight

      Maids-A-Milking, remained the same price as last year.

   -- Muffled Increase: The prices for 11 Pipers Piping ($2,635.20) and 12

      Drummers Drumming ($2,854.80) advanced minimally this year, both up just

      2.9 percent.

   -- Pear Tree: While housing prices in the general economy have been on the

      upswing, the PNC CPI splintered that trend as the Pear Tree dropped in

      price by 3.2 percent, down to $184.00. This is the only item in the index

      to drop in price this year.

   -- Maids-a-Milking: As the only unskilled laborers in the PNC CPI, the price

      for the eight Maids-a-Milking is represented by the minimum wage.  With

      the Federal minimum wage flat at $7.25 per hour, hiring the maids this

      year will not increase labor costs.

For those True Loves who prefer the convenience of shopping online, PNC Wealth Management calculates the cost of "The Twelve Days of Christmas" gifts purchased on the Internet.

This year, the trends identified in the traditional index are not repeated in the Internet version. However, True Loves will pay a grand total of $39,762.61 to buy the items online, a drop of 1.7 percent from last year, yet still $12,300 more than buying in person.

"In general, Internet prices are higher than their non-Internet counterparts because of premium shipping costs for birds and the convenience factor of shopping online," Dunigan said.

As in years past, my paycheck sure didn't increase 6.9% this year.