Supply Excellence — Inflationary Christmas

Inflationary Christmas

December 17th, 2007 · by Tim Minahan · No Comments · supply management

Tis the season for inflation. That’s the song according to the 23rd annual PNC Christmas Price Index, which tracks the costs of the goods and services referenced in the holiday classic, The 12 Days of Christmas.

According to PNC Wealth Management, which compiles the Index, the cost for the 364 items referenced in the song — from a single partridge in a pear tree to 12 drummers drumming — is up 4% over last year. Those of you crazy enough to purchase these items would ring up a $78,100 tab — although I’m not sure how romantic eight maids a milking is to anyone outside Wisconsin.

While intended to be a humorous look at markets, the Christmas Index closely mirrors changes in the Consumer Price Index. Evidence of this linkage comes in fact that higher food costs have pushed up the year-over-year price for six geese a-laying from $300 to $360. The minimum wage for maids-a-milking rose from $41 to $47. (PNC expects additional increases for milkers in 2008 and 2009.) And gold prices are up a whopping 21.5% over last year.

Not all items were up in this year’s Index. All fowl prices remained static. (In fact, PNC said the price of swans has been cut in half since 1984.) The price of nine ladies dancing also held steady.

Those of you who think you could scrounge up discounts by buying these items over the Internet, think again. (Besides, I’m certain that some of these purchases are illegal across state lines.) PNC reports that “goods and services from the survey purchased on the Internet tend to be more expensive than those purchased in a more traditional transaction.” The culprit? You guess it. High shipping costs, which have only increased over the past year due to soaring oil and gasoline prices.

I’m certain that, faced with rising energy and commodity prices today, supply managers are finding news of inflation in the Christmas Index bittersweet. Yet many of you have been able to level out recent market fluctuations through a mix of creative negotiations, improved spend leverage, and demand management techniques. These approaches will put you ahead of the cost curve as we enter the New Year.

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