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Apparel Prices Follow Economic Trend

<CS:BOLD>WASHINGTON -- Domestic producer prices for all apparel dropped 0.2 percent in January, reflecting the deflationary patterns associated with the economic downturn, the Labor Department reported Friday.<BR><BR>Compared with January 2001,...

WASHINGTON — Domestic producer prices for all apparel dropped 0.2 percent in January, reflecting the deflationary patterns associated with the economic downturn, the Labor Department reported Friday.

Compared with January 2001, domestic apparel prices fell 1.2 percent.

Wholesale prices for domestically produced women’s apparel posted a slight uptick of 0.2 percent in January, but fell 1.4 percent against January 2001. Girls’ prices remained unchanged in January and edged up 0.5 percent against January 2001.

“It’s an indication of a loss of pricing power on the part of producers,” said Carl Steidtman, chief economist with Deloitte Research.

Steidtman said the slight gain in women’s producer prices might “point to suppliers trying to hold the line on their margins going forward.”

“The strong dollar and cheap imports are hammering domestic producers,” said Charles W. McMillion, chief economist at MBG Information Services.

Overall, prices at the producer level was up slightly by 0.1 percent, although excluding food and energy prices, the index was down 0.1 percent.

“There are very clear signs the economy is not declining anymore,” said Steidtman. “We have shifted the bias of the economy from inflation to deflation and even with recovery we will not see a return of inflation.”

Textile production fell 1.1 percent in January and plunged 11.6 percent against January 2001, according to the Federal Reserve’s report also released on Friday. Apparel production rose slightly by 0.1 percent in January, but fell 10 percent against January 2001.

Capacity utilization rates for textiles stood at 71.2 percent in January, while apparel rates stood at 61.1 percent.

“As long as we have this much unused capacity and such weak demand, there will be pressure on prices for some time,” McMillion said.

Women’s skirt prices rose 2.1 percent in January, but declined 1.2 percent against January 2001. Wholesale prices rose 1.1 percent in January, but plunged 4.3 percent against the year-ago period. Prices for separate tailored jackets rose 2.7 percent last month and also gained 2.6 percent against January 2001.