Dear Alexa, My friends and I went to the movies last weekend, and at the end of the night I realized I paid more for my popcorn, soda and candy, than I did for my actual movie ticket! Why are movie concessions stands so expensive? Please Explain! Kate Well Kate,... [read more]
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How to measure inflation?

The Christmas Price Index.

Whereas the BLS (Bureau of Labor Statistics) Consumer Price Index includes food and medical care and cars, PNC Wealth Management’s CPI, its Christmas Price Index, has swans and hens and dancing maids. This year, the PNC market basket, filled with the 364 gifts in  ”The 12 Days of Christmas,” would cost you \$107,300 while last year, the total was \$101,119.84. Its 6.1% increase far exceeds the 1.8% CPI change from November 2011 to November 2012.

Prices that remained the same:

• the partridge
• turtle doves
• calling birds
• milking maids
• leaping lords

Prices that increased:

• pear tree
• French hens
• gold rings
• geese
• swans
• piping pipers
• drummers

We could hypothesize that an unchanged \$7.25 minmum wage kept most of the labor expense steady while soaring commodity prices for corn and other bird feed pushed up the price of the hens.

Our bottom line: The inflation rate depends on what you place in your market basket.

A final fact: Called the rule of 70, you can calculate how long it will take a certain statistic to double by dividing 70 by the growth rate of that variable. For example, if the growth rate of prices is 2%, just divide 70 by 2 to see that prices will double in 35 years.

Sources and Resources: At the PNC Christmas Price Index site, you can participate in an interactive animation of the index and check out how it has fluctuated during the past 29 years. For a good summary of this year’s data, I suggest USA Today while to see the US CPI, you can go to BLS data, here. Also, Econlife has looked at the PNC index for 2 years, here and here.