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Apparel Prices Continue To Fall

<CS:BOLD>WASHINGTON -- Domestic producer prices for all apparel fell 0.2 percent in December, as the overall index fell for the third straight month and the recession continued to take its toll, the Labor Department reported Friday.<BR><BR>Compared...

WASHINGTON — Domestic producer prices for all apparel fell 0.2 percent in December, as the overall index fell for the third straight month and the recession continued to take its toll, the Labor Department reported Friday.

Compared with December 2000, domestic apparel prices fell 1.2 percent.

Wholesale prices for domestically produced women’s apparel also fell 0.2 percent in December against November. Compared with December 2000, they fell 1.8 percent. Girl’s prices remained unchanged in December and edged up 0.5 percent against December 2000.

“Wholesalers continue to face weakening pricing powers and+I don’t see any end in this,” said Charles W. McMillion, chief economist at MBG Information Services. “I don’t expect prices to fall as much in the first quarter this year because retailers have been taking such deep discounts since last summer.”

McMillion did note, however, that he expects to see several retailers and wholesalers shut down early this year, which could spark more markdowns and promotions.

Overall, prices at the producer level for all U.S.-made goods fell 0.7 percent in December, marking the third straight month of declines. The drop in the overall Producer Price Index was driven by the decline in energy prices, which fell 4 percent in December.

“This is the same trend we have seen in the past several months,” said Wendy Mak, an economist with the WEFA Group.

Women’s suit prices posted the largest decline in December, dropping 3.9 percent against November and further plunging, by 6.7 percent against December 2000. Wholesale prices for women’s dresses fell 0.5 percent in December and further declined by 6.8 percent against December 2000. Women’s skirt prices fell 0.2 percent in December and 1.8 percent against December 2000. While domestic producer prices for bathing suits rose 4 percent in December, they plunged sharply by 15.1 percent against the year-ago period.

“There is a widening disparity between weakening demand domestically and globally, and productive capability,” McMillion said. “There is more capacity to produce than there are consumers willing to buy and the big question is what the consumer will do this quarter.”