The rising cost of Christmas

Inflation is set to be a dominant theme in 2007. Will a cooling US economy and global rising rates offset higher energy and raw material increases? We have been scouring around for data and have found the Christmas Price Index. Someone with too much time on their hands has created an index that tracks the cost of the elements in the song “the 12 days of Christmas”.

The Christmas index has risen 3.1% this year which compares with the US core personal rate at 2.2% and UK CPI at 2.7%. A key factor for the higher Christmas rate is that the cost of a pear tree has rocketed 44% due to demand for ornamental trees from landscapers. The cost of 4 calling birds rose 20%.

The surprising aspects of the survey (if you exclude the fact that you can pay 10 lords to leap) was that there was no increase in the price of 5 gold rings despite higher gold prices (bad news for jewellers’ margins?) and that the internet index (the price rise if you bought the same items online) rose 3.4%, perhaps showing that there are less marketing budgets being used on the internet as it becomes more mainstream.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

David Fancourt

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