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Retail Apparel Prices See Uptick

Retail prices on women's apparel increased a seasonally adjusted 1.3 percent in August and were 2.2 percent ahead of a year earlier, according to the Labor Department's Consumer Price Index.

WASHINGTON — Retail prices on women’s apparel increased a seasonally adjusted 1.3 percent in August and were 2.2 percent ahead of a year earlier, according to the Labor Department’s Consumer Price Index.

This story first appeared in the September 18, 2006 issue of WWD.  Subscribe Today.

The monthly report, released Friday, also offered a snapshot of inflation: Prices of all goods inched up 0.2 percent, compared with 0.4 in July. The core rate of inflation, which takes into account prices on all goods except volatile food and energy products, also rose 0.2 percent in August, matching its increase in July.

The latest figures come as the Federal Reserve Board’s Open Market Committee, which has been trying to slow inflation, prepares to meet on Wednesday. The Fed had 17 consecutive rate increases until it ended the two-year run of boosts last month and opted to keep the benchmark federal funds interest rate at 5.25 percent.

“They’re going to sit on the sidelines,” said Richard Yamarone, chief economist at Argus Research Corp., predicting that the Fed would make no change in the interest rates. “The consumer sector is not as dire as many had believed. Energy prices have fallen, and that’s given consumers more money to spend.”

Shoppers might be affected if the economy cools, as many economists predict.

“There is going to be a slowdown coming in the next three to six months,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “It’s already on the way, so the [retail] sales are not going to be as good as people were expecting, say, six or nine months ago. What really matters when it comes down to spending money is how are [consumer] incomes doing and how are their job prospects doing,” not just oil prices and the Fed’s actions.

After years of deflation, partly because of lower-cost imports and fierce competition in the retail sector, prices of women’s apparel have shown some buoyancy; seasonally adjusted prices were up 1.6 percent this year. Over the past five years, prices had dropped 4.4 percent.

In August, dress prices increased 2.1 percent and were 13.2 percent ahead of a year ago, and suits and separates were up 1.9 percent for the month and 3.7 percent from August 2005. Women’s outerwear had a mixed showing; prices were up 3.2 percent for the month, but down 9.3 percent against a year earlier.