A Historical Comparison: The True Cost of Christmas vs. UK House Prices
For over 30 years, PNC has identified and tracked the changing costs of the gifts mentioned in the Christmas carol, The Twelve Days of Christmas.
The index offers two final figures:
- The Total Christmas Price Index: This is calculated by totalling the gifts mentioned in the Christmas carol, The Twelve Days of Christmas, excluding repetitions.
- The True Cost of Christmas: This is calculated by totalling 364 cumulative gifts mentioned in the Christmas carol, The Twelve Days of Christmas, including repetitions.
This year, the Total Christmas Price Index is $34,558.65 - which is £25,846.41 according to Google Finance on the 8th December. According to PNC, this equates to a rise of 0.6% since last year’s total. The True Cost of Christmas (including the song’s repetitions) is said to be $157,558.00, which equates to £117,837.63.
What does the index show?
The Christmas Price Index is a festive way to track how an economy can change over time.
The data is sourced in the U.S., and is similar to the U.S. CPI (Consumer Price Index), which tracks “the changing prices of goods and services like housing, food, clothing, transportation and more that reflect the spending habits of the average American.”
Across the world, Consumer Price Index is a measurement that “examines the weighted average of prices of a basket of consumer goods and service.” It is calculated by identifying the price changes for each item in the outlined basket of consumer goods. It is most commonly used to track inflation, and can highlight the pace at which prices are rising (or falling, in the case of deflation).
Comparing Growth: The True Cost of Christmas vs. UK House Prices
As savers know, inflation can damage the purchasing power of hard-earned cash. If your money isn’t earning an interest rate above the rate of inflation, prices will rise and your money won’t be able to buy you as much as it used to.
While inflation might seem like a scary term, one of the ways you might be able to avoid inflation is to invest in real assets. Real assets are physical, and tend to rise at a similar pace to or above the rate of inflation.
In the 10 years between 2006 and 2016, the rate of inflation has, on average, been 2.2%. Based on the annual change recorded in Q4 between 2006 and 2016 in Nationwide’s House Prices Since 1952, house prices have, on average, grown by 2.7% per year.
Considering house prices have outpaced inflation in this way, savers keen to maintain their capital’s purchasing power may choose to wrap their money up in bricks and mortar this Christmas.
Past performance is not a reliable indicator of future performance.
Capital at risk