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Inflation is increasing gift costs for a “true love” this Christmas season.
The Christmas Price Index is up 5.7% in 2021 relative to its pre-pandemic level in 2019, the largest increase in eight years, according to an annual calculation published by PNC, a financial services firm.
The index measures the cost of all items in a full verse of the Christmas song “12 Days of Christmas.” The price — of two turtle doves, five gold rings and 10 pipers piping, for example — grew to $41,206 this year, from $38,994 in 2019.
The index isn’t meant to indicate a household’s true cost for holiday gifts.
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For one, it skews heavily toward luxury and specialty items most individuals won’t buy. The average American consumer expects to pay $648 this holiday season on gifts for family, friends and co-workers, according to the National Retail Federation.
But the lighthearted Christmas Price Index is indicative of some broad trends in the U.S. economy.
“Inflation this year has certainly been surprising to the upside,” said Amanda Agati, chief investment officer at PNC’s Asset Management Group. “This very specialty gift basket is largely mirroring what we’re seeing in the larger economy.”
U.S. inflation jumped by 6.2% in October relative to a year earlier, the largest increase in more than 30 years, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index. The increase means American households are generally paying more for goods.
The headline figure is an average that masks ample variation. For example, costs are up for gasoline (50%) and used cars and trucks (26%), but increases are more modest for fresh vegetables (1.7%) and household cleaning products (1.1%) over the 12-month period.
The Federal Reserve aims for annual inflation around 2%. It’s unclear to what extent the recent spike will be longer-lasting or a temporary, pandemic-related disruption. Consumer price increases this year, to some extent, make up for tepid inflation in recent years, Agati said.
The Christmas Price Index’s increase in 2021 is the largest since 2013, when annual costs grew by 6.6%, according to PNC.
Exotic pets, performers and gold rings experienced the largest price jumps this year, Agati said.
Prices for six geese-a-laying, two turtle doves and three French hens are up 57.1%, 50% and 40.5%, respectively, in 2021 versus pre-pandemic levels, for example, according to PNC’s analysis.
The cost for 10 lords-a-leaping was up 12.6%, and 7.1% each for the 11 pipers piping and 12 drummers drumming.
(PNC’s analysis uses costs supplied by various companies. The Philadelphia Ballet supplied the cost of the lords-a-leaping, for example, while national bird suppliers, hatcheries and waterfowl farms offered those for some exotic pets. For consistency, the price sources remain the same each year.)