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For 37 years, PNC has calculated the prices of the 12 gifts from the classic holiday song, “The Twelve Days of Christmas.” This year, the list looks a little different with adjustments for the pandemic’s impact on the cost of purchasing the presents in the renowned carol.
It will cost just $16,168.14 to buy all of the gifts in the classic carol, a drop of 58.5% from last year’s costs. The true cost of Christmas decreased in 2020, as this year’s index accounts for cancellations of many live performances: a third of the index constituents are literally not available for purchase this year.
The PNC Christmas Price Index (PNC CPI) is calculated using a method similar to the government’s consumer price index (CPI) and measures the cost of buying the gifts given in “The 12 Days of Christmas.”
The government’s CPI measures the cost of goods and services for consumers; you can think of it like your cost of living. Each month, the U.S. Bureau of Labor Statistics reports on the CPI; since those numbers are tied to inflation, they tend to be indicators on interest rates. The CPI measures the cost of goods and services—in other words, your cost of living. That’s important to taxpayers since the Tax Code provides for mandatory annual adjustments to certain tax items, like the standard deduction amounts, based on interest rates.
Under the Tax Cuts And Jobs Act (TCJA), the Internal Revenue Service (IRS) now figures cost-of-living adjustments using a “chained” CPI. The chained CPI measures consumer responses to higher prices rather than merely measuring the higher prices. You can find out more about chained CPI here.
But not all adjustments are equal. To keep the comparison between its index and the government’s CPI fair, PNC excludes the cost of the swans, typically the most volatile item in the list (the government similarly excludes energy and food prices). This year’s PNC CPI also includes adjustments for the reality that many live performances have been cancelled.
“2020 has been anything but conventional for consumers, the markets and the economy. In response to these unusual times, we took a non-traditional view in calculating the Christmas Price Index,” said Amanda Agati, chief investment strategist for The PNC Financial Services Group.
“The biggest impact has been for live performances, which are mostly unavailable this holiday season. While some performing arts groups are finding ways to engage, such as through virtual presentations, it’s a silent night at most symphonies and the lights have dimmed on many dance companies, as reflected in this year’s significant drop in PNC’s CPI data.”
The cost of the 12 gifts can be found on PNC’s interactive website.
“In 2020, the inflation story due to COVID-19 as told by the BLS’ Consumer Price Index has surprised to the downside, averaging just 1.3% over the last year versus the Federal Reserve’s 2% target over time. Despite excluding the items that were unavailable due to COVID-19, we still saw a 2.9% increase in the PNC CPI,” Agati said.
“The largest price increases this year have come in the food and exotic pet categories. While this may initially seem like inflation is already here and potentially problematic, the categories depicted are very narrow and specialized. This isn’t indicative of a broad-based inflation spike.”
Here’s the entire list for 2020 along with the percentage changes from 2019:
- 1 Partridge in a Pear Tree: $210.18 (0%)
- 2 Turtledoves: $450.00 (+50%)
- 3 French Hens: $210.00 (+15.7%)
- 4 Calling Birds: $599.96 (no change)
- 5 Gold Rings: $945.00 (+14.5%)
- 6 Geese-a-Laying: $570.00 (+35.7%)
- 7 Swans-a-Swimming: $13,125.00 (no change)
- 8 Maids-a-Milking: $58.00 (no change)
- 9 Ladies Dancing: NOT AVAILABLE
- 10 Lords-a-Leaping: NOT AVAILABLE
- 11 Pipers Piping: NOT AVAILABLE
- 12 Drummers Drumming: NOT AVAILABLE
If, however, you really wanted to impress your true love by nabbing all 364 items–the number of the items as repeated throughout the song over and over (and over)–you’d have to cough up $105,561.80: spreading cheer throughout the year in 2020 costs 38% less than in 2019, given the exclusion of live performances. Stay at home orders mean that dancers and band members aren’t on stage this year, making them impossible to price.
What else stands out about this year’s list?
Prices are for the birds. Birds represent the largest price increases in this year’s index, a 36.4% increase in total from 2019. Since consumers can’t go out to restaurants as much as before, cooking at home has increased, leading to an unexpected uptick in demand – and prices. COVID-19 has also accelerated the trend toward backyard farming that has been steadily growing over the last few years.
Gold rush. When the pandemic began, investors made a dash for gold on inflation fears. Gold traded up 40%, but eventually flattened after inflation fears subsided.
Dashing through the streets. Santa’s sleigh will have plenty of help hauling presents, thanks to shipping services. That’s reflected in the additional travel and shipping costs factored into this year’s internet prices. Prices will spend an additional $4,186.95 when shopping online, paying a total of $20,355.09 for the convenience. But money can’t buy everything: free shipping for livestock purchases is not an option just yet.
Don’t forget that sales tax (or use tax, if you’re shopping online) might be payable on your Christmas gifts–but that varies by location. While most states impose some level of sales tax, there is dramatic variation between what goods and services are subject to tax. This is especially true when it comes to the costs of services. PNC is located in Pennsylvania where food (except for ready-to-eat), most clothing apparel, and medicines are nontaxable. But that pear tree? Taxable. Those gold rings? Taxable. Pets and most animals? Also taxable. Those milkmaids, however? Not taxable—as a farm and dairy state, most dairy-related services are exempt. Figuring the exemptions from state to state would be wildly time-consuming, so the CPI is tax neutral.
PNC has figured the CPI each year since 1984. The sources for the prices from year to year generally remain the same to promote consistency. The PNC CPI was developed for inclusion in a holiday message to clients. Now designed to share and educate all consumers, the PNC CPI continues to highlight market changes over time.
“Like the index, our concluding thought is on what sets the pace for the markets,” said Agati. “Consumer behavior is the drum beat for the US economy. With 70% of US GDP tied to consumption, consumer health is key to future market performance. Keep an eye on guiding stars like retail sales, savings rates and e-commerce growth as indicators of the success of this holiday season.”
Agati had more to say about the PNC CPI and what it says about the economy on a recent episode of the Taxgirl podcast. You can hear what Agati’s thoughts on what consumers can likely expect when the pandemic is over here.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.